Question
In: Accounting
3: Access Inc. is in operation from last 8 years, and have a balance of $640,000...
3: Access Inc. is in operation from last 8 years, and have a balance of $640,000 in the machinery account as at Jan 01, 2000. the remaning life of this machinery is 7 years and had a salvage value of 63000. On August 01, 2000, the Company made additions to the machinery a/c of $98,000. The machinery is expected to produce a total of 200,000 units. The machinery was used in the production in the following manner:
Year Production
2000 13,400
2001 34,200
2002 38,400
2003 39,100
2004 31,900
2005 28,060
2006 14,940
There was another addition to the machineries for $126,000 on Jan 01, 2002. The useful life of the asset is 9 years and it can realize $13,400 at the end of 9 years. On Jan 01, 2006, the company reassessed the useful life of this machiney to be 11 years, while the salvage value remained the same.
On Oct 01, 2005, the company bought an equipemt, which was expected to be used a total of 46,000 machine hours (MH) The equipment was used as per the below mentioned schedule:
2005 $ 1,730
2006 $ 4,200
2007 $ 3,100
2008 $ 4,600
2009 $ 5,900
2010 $ 7,070
At the end of 2010, the company assessed that its original estimation was wrong and the equipment is expected to work only 12,000 more machine hours. During 2011, the equipment was used for 4,800MH, 2012 5,300MH, and rest of the hours were used in 2013.
Prepared a schedule of the machinery and equipment account together.
Show your working notes properly.
Hint: For presentation purpose, you can give numbering to the machinese,
Solutions
Expert Solution
| Composite schedule is as follows- | ||
| Date | Particulars | Amount |
| 01-01-2000 | Opening | 6,40,000 |
| 01-08-2000 | Additions | 98,000 |
| 2000 | Depreciation | -88,995 |
| 31-12-2000 | Net block | 6,49,005 |
| 2001 | Depreciation | -99,187 |
| 31-12-2001 | Net block | 5,49,819 |
| 01-01-2002 | additions | 1,26,000 |
| 2002 | Depreciation | -1,13,756 |
| 31-12-2002 | Net block | 5,62,063 |
| 2003 | Depreciation | -1,14,099 |
| 31-12-2003 | Net block | 4,47,964 |
| 2004 | Depreciation | -1,10,571 |
| 31-12-2004 | Net block | 3,37,394 |
| 01-01-2005 | Additions | 46,000 |
| 2005 | Depreciation | -1,10,419 |
| 31-12-2005 | Net block | 2,72,975 |
| 2006 | Depreciation | -95,087 |
| 31-12-2006 | Net block | 1,77,888 |
| 2007 | Depreciation | -13,336 |
| 31-12-2007 | Net block | 1,64,552 |
| 2008 | Depreciation | -14,836 |
| 31-12-2008 | Net block | 1,49,715 |
| 2009 | Depreciation | -16,136 |
| 31-12-2009 | Net block | 1,33,579 |
| 2010 | Depreciation | -17,306 |
| 31-12-2010 | Net block | 1,16,273 |
| 2011 | Depreciation | -17,996 |
| 31-12-2011 | Net block | 98,276 |
| 2012 | Depreciation | -18,805 |
| 31-12-2012 | Net block | 79,472 |
| 2013 | Depreciation | -3,072 |
| 31-12-2013 | Net block | 76,400 |
Machine 1 working is as follows-
| Date | Particulars | Amount |
| 01-01-2000 | Opening value | 6,40,000 |
| Depreciation (640,000-63,000)/7 | -82,429 | |
| 31-12-2000 | Net block | 5,57,571 |
| 2001 | Depreciation | -82,429 |
| 31-12-2001 | Net block | 4,75,143 |
| 2002 | Depreciation | -82,429 |
| 31-12-2002 | Net block | 3,92,714 |
| 2003 | Depreciation | -82,429 |
| 31-12-2003 | Net block | 3,10,286 |
| 2004 | Depreciation | -82,429 |
| 31-12-2004 | Net block | 2,27,857 |
| 2005 | Depreciation | -82,429 |
| 31-12-2005 | Net block | 1,45,429 |
| 2006 | Depreciation | -82,429 |
| 31-12-2006 | Net block | 63,000 |
Machine 2 working is as follows-
| Machine 2 | ||
| Date | Particulars | Amount |
| 01-08-2000 | Addition | 98,000 |
| 2000 | Depreciation | 6,566 |
| 31-12-2000 | Net block | 91,434 |
| 2001 | Depreciation | 16,758 |
| 31-12-2001 | Net block | 74,676 |
| 2002 | Depreciation | 18,816 |
| 31-12-2002 | Net block | 55,860 |
| 2003 | Depreciation | 19,159 |
| 31-12-2003 | Net block | 36,701 |
| 2004 | Depreciation | 15,631 |
| 31-12-2004 | Net block | 21,070 |
| 2005 | Depreciation | 13,749 |
| 31-12-2005 | Net block | 7,321 |
| 2006 | Depreciation | 7,321 |
| 31-12-2006 | Net block | - |
Machine 3 working is as follows-
| Machine 3 | ||
| Date | Particulars | Amount |
| 01-08-2000 | Addition | - |
| 2000 | Depreciation | - |
| 31-12-2000 | Net block | - |
| 2001 | Depreciation | - |
| 31-12-2001 | Net block | - |
| 01-01-2002 | Addition | 1,26,000 |
| 2002 | Depreciation | 12,511 |
| 31-12-2002 | Net block | 1,13,489 |
| 2003 | Depreciation | 12,511 |
| 31-12-2003 | Net block | 1,00,978 |
| 2004 | Depreciation | 12,511 |
| 31-12-2004 | Net block | 88,467 |
| 2005 | Depreciation | 12,511 |
| 31-12-2005 | Net block | 75,956 |
| 2006 | Depreciation | 1,137 |
| 31-12-2006 | Net block | 74,818 |
| 2007 | Depreciation | 10,236 |
| 31-12-2007 | Net block | 64,582 |
| 2008 | Depreciation | 10,236 |
| 31-12-2008 | Net block |
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