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The ABC, a computer manufacturing organization, is using building “ALFA–I” as manufacturing department while building “ALFA–II” for its administrative work. As a “Manager Accounts”, you are required to advice to the Accountant of the organization with logical reason regarding the treatment of depreciation of the building “ALFA–I” as direct or indirect manufacturing expense. Also explain to him that in which heads of the “Income Statement” the depreciation of “ALFA-1” and “ALFA–II” will be reported.

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plz koi theek solution send karin becoz koi direct manufacturing expense kah raha hai koi indirect kah raha hai plzzzzzzz zara theek theek help karin .muje kuch seamj nai a rahi.kindly help me.

i thank ful 2 u.today is last day.

koi hai yahan online plz help me,yahan lite bohat tang kar rahi hai study time nai hai.her 1 hour bad chali jati hai .2,2 hours k laiy.

The building ‘ALFA-1’ is being used for manufacturing purpose so the depreciation of this building should be treated as direct manufacturing expense. The direct manufacturing cost can be divided into three types which are direct labor cost, direct materials cost and factory overhead. So the depreciation of this building should be treated as directed manufacturing expense.

The depreciation of ALFA-1 will appear in the cost of the goods sold in the income statement as it is a direct manufacturing cost comes under factory overhead.
The depreciation of the ALFA-2 will appear in the interest expense or general administration expense

Answer:

 

My Advice to accountant of the organization regarding the depreciation of building

“ALFA–I” is, treat the depreciation of Building “ALFA–I” as indirect manufacturing

expenses 

Reasons:

Depreciation of building is an indirect manufacturing expense because indirect

manufacturing expenses are the factory cost that is associated with manufacturing process

but it can not be directly identified as a part of the cost of Finished Goods.

 

·  Depreciation of “ALFA-1” reported in “Indirect Costs or Factory Overheads”

Head of income statement

·  Depreciation of “ALFA–II” reported in “Administration Expenses” Head of the

Income Statement. 

The  ABC,  a  computer  manufacturing  organization,  is  using  building  “ALFA–I”  as

manufacturing department while building “ALFA–II”  for  its administrative work.   As a

“Manager Accounts”,  you are  required  to advice  to  the Accountant of  the organization

with logical reason regarding the treatment of depreciation of the building “ALFA–I” as

direct or indirect manufacturing expense.

Also explain to him  that  in which heads of  the “Income Statement”  the depreciation of

“ALFA-1” and “ALFA–II” will be reported.  

 

Answer:

 

My Advice to accountant of the organization regarding the depreciation of building

“ALFA–I” is, treat the depreciation of Building “ALFA–I” as indirect manufacturing

expenses 

Reasons:

Depreciation of building is an indirect manufacturing expense because indirect

manufacturing expenses are the factory cost that is associated with manufacturing process

but it can not be directly identified as a part of the cost of Finished Goods.

 

·  Depreciation of “ALFA-1” reported in “Indirect Costs or Factory Overheads”

Head of income statement

·  Depreciation of “ALFA–II” reported in “Administration Expenses” Head of the

Income Statement.

 

 

This is just an idea please make your own solution .  thnxx

 

 

Answer:

According to GAAP we shall treat the depreciation expense of Building Alfa 1 as an indirect manufacturing expense or factory overhead. As we know that building is directly used in manufacturing work but its depreciation is an indirect expense which will be written under the head of Factory overhead indirect cost.

Secondly in Income statement depreciation of building ALFA 1   will be treated under the head of Factory overhead as an indirect expense and depreciation of  Building Alfa 2 will be written under Administrative expense in income statement and will be deducted from gross profit.

 

Answer:
My Advice to accountant of the organization regarding the depreciation of building
“ALFA–I” is, treat the depreciation of Building “ALFA–I” as indirect manufacturing
expenses
Reasons:
Depreciation of building is an indirect manufacturing expense because indirect
manufacturing expenses are the factory cost that is associated with manufacturing process
but it can not be directly identified as a part of the cost of Finished Goods.
· Depreciation of “ALFA-1” reported in “Indirect Costs or Factory Overheads”
Head of income statement
· Depreciation of “ALFA–II” reported in “Administration Expenses” Head of the
Income Statement.

The ABC, a computer manufacturing organization, is using building “ALFA–I” as
manufacturing department while building “ALFA–II” for its administrative work. As a
“Manager Accounts”, you are required to advice to the Accountant of the organization
with logical reason regarding the treatment of depreciation of the building “ALFA–I” as
direct or indirect manufacturing expense.
Also explain to him that in which heads of the “Income Statement” the depreciation of
“ALFA-1” and “ALFA–II” will be reported.
Answer:
My Advice to accountant of the organization regarding the depreciation of building
“ALFA–I” is, treat the depreciation of Building “ALFA–I” as indirect manufacturing
expenses
Reasons:
Depreciation of building is an indirect manufacturing expense because indirect
manufacturing expenses are the factory cost that is associated with manufacturing process
but it can not be directly identified as a part of the cost of Finished Goods.
· Depreciation of “ALFA-1” reported in “Indirect Costs or Factory Overheads”
Head of income statement
· Depreciation of “ALFA–II” reported in “Administration Expenses” Head of the
Income Statement.

THANKS SIR.....

JAZAKALLAHKHIRR 

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