Question

In: Accounting

Prepare Machinery account for four years from 1 January 2017.


A Firm purchased an old Machinery for RM37,000 on 1 January, 2017 and spent RM3,000 on its overhauling. On 1 July 2018, another machine was purchased for RM 10,000. On 1 July 2019, the machinery which was purchased on 1 January 2017, was sold for RM28,000 and the same day a new machinery costing RM25,000 was purchased. On 1 July, 2020, the machine which was purchased on 1 July, 2018 was sold for RM2,000. Depreciation is charged at 10% per annum on straight line method. The firm changed the method and adopted diminishing balance method with effect from 1 January, 2018 and the rate was increased to 15% per annum. The books are closed on 31 December every year.


Required:-


Prepare Machinery account for four years from 1 January 2017. 


Solutions

Expert Solution

Retrospective Adjustment is given in case of change in method of charging depreciation.

Cl. Balance as per Normal SLM = 36,000 AND Cl. Balance after 1st year WDV = 34,000. So, Additional Deprexiatiob adjustment due to change = 36,000 - 34,000 = 2,000

Depreciation is charge as per asset was consumed during the year.

When asset is sold, cost is to reduced from asset account . Corresponding profit or loss on sale will be adjusted in profit and loss account.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Shamrock Company purchased machinery on January 1, 2017, for $ 97,600. The machinery is estimated to...
Shamrock Company purchased machinery on January 1, 2017, for $ 97,600. The machinery is estimated to have a salvage value of $ 9,760 after a useful life of 8 years. 1. Compute 2017 depreciation expense using the sum-of-the-years'-digits method. 2.Compute 2017 depreciation expense using the sum-of-the-years'-digits method, assuming the machinery was purchased on April 1, 2017.
Whispering Company purchased machinery for $165,900 on January 1, 2017. It is estimated that the machinery...
Whispering Company purchased machinery for $165,900 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14,700, production of 91,100 units, and working hours of 46,100. During 2017, the company uses the machinery for 13,369 hours, and the machinery produces 12,754 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years’-digits, and double-declining-balance methods. (Round intermediate calculations to 5 decimal places, e.g. 1.56487 and final answers to 0 decimal...
Kingbird Company purchased machinery on January 1, 2017 for $99200. The machinery is estimated to have...
Kingbird Company purchased machinery on January 1, 2017 for $99200. The machinery is estimated to have a salvage value of $9,920 after a useful life of 8 years. A. Compute the 2017 depreciation expense using double-declining balance method. B. Compute 2017 depreciation expense using the double-declining-balance method, assuming the machinery was purchased on October 1, 2017.
1. Jalloh Company purchased machinery for $162,000 on January 1, 2017. It is estimated that the...
1. Jalloh Company purchased machinery for $162,000 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $15,000, production of 84,000 units, and working hours of 42,000. During 2017, the company uses the machinery for 14,300 hours, and the machinery produces 20,000 units. Compute depreciation under the straight-line, unit of output, working hours, sum of the year’s digits, and double-declining balance methods.
Right- to- Debbink Co. leased machinery from Young, Inc. on January 1, 2017. The lease term...
Right- to- Debbink Co. leased machinery from Young, Inc. on January 1, 2017. The lease term was for 8 years, with equal annual rental payments of $5,300 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $2,000, which Debbink is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $6,000. The machinery has a useful...
On January 1, 2017, Nobel Corporation acquired machinery at a cost of $1,200,000. Nobel adopted the...
On January 1, 2017, Nobel Corporation acquired machinery at a cost of $1,200,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2020, a decision was made to change the residual value to $100,000. The amount that Nobel should record as depreciation expense for 2020 is
Anxious Company acquired three items of machinery. * On January 1, 2017, the entity purchased a...
Anxious Company acquired three items of machinery. * On January 1, 2017, the entity purchased a machine for 500,000 down and four monthly installments of 1,250,000. The cash price of the machine was 4,700,000. * On December 31, 2017, the entity purchased a machine in exchange for a noninterest bearing note requiring ten payments of 500,000. The first payment was made on December 31, 2018, and the others are due annually on December 31. The prevailing rate of interest for...
On January 1, 2020, the Accumulated Depreciation—Machinery account of Astros Company showed a balance of $370,000....
On January 1, 2020, the Accumulated Depreciation—Machinery account of Astros Company showed a balance of $370,000. At the end of 2020, after the adjusting entries were posted, it showed a balance of $395,000. During 2020, one of the machines which cost $125,000 was sold for $60,500 cash. This resulted in a loss of $4,000. Assuming that no other assets were disposed of during the year, how much was depreciation expense for 2020?
Sheffield Leasing Company agrees to lease machinery to Tamarisk Corporation on January 1, 2017. The following...
Sheffield Leasing Company agrees to lease machinery to Tamarisk Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $483,000, and the fair value of the asset on January 1, 2017, is $757,000. 3. At the end of the lease term, the asset reverts to the...
Flounder Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The...
Flounder Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $25,349 at the beginning of each year. The first payment is received on January 1, 2017. Flounder had purchased the machine during 2016 for $98,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Flounder. Flounder set the annual rental...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT