co oe as. CONCEPT AND ACCOUNTING OF DEPRECIATION STRAIGHT LINE METHOD {st jin Bros, acquired a machine on July, 2015 ata cost of R1400,000 and spent Rs:100,000 on its installation. The fm vritos off depreciation a 10% pa. of the original cost every year. The books are sed on 31 Dacember every year Required: ‘Show the Machinery Acceunt and Depreciation Account for the year 2015 and 2016 [sMP3]\/s rab Pharmaceuticals hos imported a machine on 1* July, 2014, for Pound 8,00, paid ‘custom duty and right R 90,000 and incurred erection charges R.60,00, local machinery 527,0,000 5 received settlement. On the same date another truck is porchased by the 1m of Rs S0,0,000, The company writes off 20% onthe original cast perannum ny obferve the calendar year sits financial year. ‘vet motor ruck a0 Tor two Yea ending 31 De, 2017 WRITTEN DOWN VALUE {92 Jin Bros. acquired a machine on 1 uly, 2015 ata east of Rs14,0,000 and spent Rs:,00,000, tnt astalation, The fn writes of depreciation at 1034 pa. evry yea. The books ae closed on 31 December very year Required: Show te Machinery Account on diminishing balance method forthe year 2015 and 2036. {9m 101A fim purchast on 1 January, 2015 carta machinery fr Rs 582,000 and spent Rs.18,000, ‘nits erection. On July 1, 2035 another machinery fr Rs2,0,000 was aquired. On 1 July, 2016 the ‘machinery purchased ox 1 January, 2015 having become obsolete was auctioned for R53,86000 and ‘onthe same date fresh machinery was purchased ata cost of Rs.4.00000, Depreciation was provided for annualy on Sst December atthe rate of 10 per ent pa. on writen down vale. Required: Prepare macinery accountPAZAS perv or conmunnce Pvt. 170, cs [smp2yrhe Machinery Account of Factory showed a balance of Rs.19,00,00 on 1 January, 2015 Is accounts were made up on 31* December eath year and deprecation Is written off t 10% pa. under ‘he Diminishing Balance Method. fon 1 June 2035, new machinery was acquired ata cost of Rs2,80000 and instalation charges incurred in erecting te machine works ou to RS.,920 on the same dat. On 1 June, 2015 a machine which had cost Rs 427400 on 1 January 2013 was sold or R4.75,000. Another machine which had ost Rs37,000 on I Jauary, 2014 was crapped onthe see date snd realised nothing Write plant and machinery account forthe year 2015, allowing the same rate of depreciation asin the st cleuatng deprecon to the nearest multiple ofa Rupee. ‘SUM OF DIGITS METHOD [SMa] M/s Alash & Co, purchased a machine for RS.10,00000, Estimated useful fe and serap value were 10 years nd RS1,2,000 respctivly The machine was put to use on 11.2010 Required Show Machinery Account an! Depreciation Account in thele oaks for 2015 by using sum of years Ags method. PRODUCTION UNIT METHOD [soa] A machine i purchased for 20,000. Its estimated useful fe Is 10 years with a residual ‘Yalu of Re 200,000. The machine sexpacod to produce 1.5 lakh units during is fe time. Expected Aisteiution patter of production is35 lows: eae Production 4:3 20,000untsperyear 47° 15,000unlts per year 8:19 10,000unts per rear Required Determine the value of pretation for each year using production units method. Machine Hour Rate Method [s017] A machine was purctased for Rs.30,00000 having an estimated total working of 24000 hours. ‘The serap vale ls expeced to be R52,0,000 and anticipated pattrn of dstrbution of eflective ours isasfollowe Year 173 2,000 hours pergear 426 2.600 hours per ear 7-10 1800 hours per ear Required ‘Determine Annual Depreciation under Machine Hour Rate Method. 52PAZAS esr or connemnce rrr. ur. 10. au. wa, Depletion Method {sto} M/s Surya & Co. lass ofa quarry on 1-1-2013 for R50000,000. Aspe ena estimate the tual quantity of mineral depots 200UU tones. Vepreciauon was charged on te bass oF tepltion method Extraction pattern sven in the olowing able: Year QuanllytMineral eracted 20132000 tones 2014 Lo 000onnes 3015 15,000tomes Required Show the Quarry Lats count and Depreciation Account fr cach year fom 2013 02015. Change in Method 1M/s-Green Channel purease second-hand machine on 1stJanuary, 2015 for Rs 160,00, Overhatlingand erection charges amounted to Rs, 40,000. Another machine was purchased for Rs 80,00 on 1 fly, 201 ‘On 1st July, 2087, the machine installed on 15 January, 2 machine amounted to RS. 30000 was purchased Under the easing pact the company provide from the year 20181 deided to adopt IDV metho for Rs, 100000. Another ‘on 30° September, 2017 # 10% pa.on original eost However, ree depreciation @ 15% pa. Youare [R-N18/71{CA(Foundstion may 2003)) Ismiayt/s Anstal 6 Glos on 1 January 2011, when they purchased plant and aulpment fone 00 oped a poly of charg depreation st 159 pr annum on Alii cs bagdind Over the years, thelr purchases of plant hae ben: Date P Amount (Rs) 112012 4430000 11.2015 290000 (0m 1-4-2015 twas decided to change the method and rate of depreciton to straight ine asi On this date remaining useful ie was assessed as 6 years for all the assets purchased before 1.12015 and 10 yeas for the asset purctased on 1.2015 with no scrap value Requiced ‘Calculate the ference in depreciation tobe ajsted inthe Pant and Equlpment Account forthe year ‘ending 31 December, 215.PAZAS werrors or comancs rrr. CHANGE IN LIFE (13, {841244 Machine costing; Rs#:0,000s deprecated on sah line bas sou 10 yeas working life and Ni residual vals, for tree years. The estimate of remaining wel life aer third year was reassessed at 5 years Required: Calculate depreciation forthe fourth ea. Qt4, [S013] machine of cos Rs12,00000 is deprecated straight-line assuming 10 year working if and ‘ero residual value (or tee year. At the end of third year, the machine was revalued upwards by 60,00 the remaiingusetl fe was reassessed at 9 years. Required Calculate depreciation forthe fourth year. ASSETS DISPOSAL ACCOUNTS 15. ISMPI]A frm’s plant and machinery acount at 31* December, 2015 and the corresponding Aleprecation provision cour broken down by year of purchase ates lls ‘Year of Purchase Plant and Machinery a cost Depreciation Provision 1998 700,000, "200,000, 2004 300.000, ‘300000 200s 1000000, 50000 2006 7190,000, 595,000, a3 0.000, 7500 201 300,000, 1500 "3090.00 3,35,000 Depreciation lat the rate of 10% per annum Ba east. isthe Companys pli to assume that all purchases, sles or dsfosal of plant acorred on 30% June in the relevant year forthe purpose of «aleulating depreciation irrespective of the precise date on which these events occurred During 2025 the following transactions took place: 1. Purchase of plantand machinery amounted to Rs.15,00,000, Plant that had been bought in 2004 for Rs 170,000 was Serapped 2 3, Plant that had bem bought in 2005 fr Rs 90,00 was sold for Rs, 000. 44. Plant hat had boon bought in 2006 for Rs.240,000 wassld for R.15,000 Youare required wo: Caleulate the provision for deprecation of plant and machinery forthe year ended 31% December, 2015, In calculating thisprovision you should bea in mind that itis the company’s poy to show any Droit o Iss on these or disposal of plant asa completly separate item in the Profit and Loss Account. You are also reed to prepare the following ledger accounts during 2015 (0) Mancana machcery aco {i Depreciation provision; ii) Salesordsposalofplant snd machineryPABAS pesrrrurs or conmnnce rer. ur. HOME WORK o