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M/s Singhania and Bros. purchased a plant of Rs. 5,00,000 on April o1.2017. and spent Rs.50,000 for its installation. The salvage value of the after its useful life of 10 years is estimated to be Rs. 10,000.Record journal entries for the year 2016-17 and draw up Plant account and Depreication Account for first three given theat the depreciation is charged using straight line method if : (i) The books of account close on March 31 every year, and (ii) The firm charges depreciation to the asset account |
Answer» SOLUTION : Depreciation, Provisions and Reserves  WORKING Notes (1) Calcuation of oiginal cost `{:(,"(RS.)"),("Puchase cost","50,00,000"),("Add: Installation cost",underline("50,000")),("ORIGINAL cost","5,50,000"),("Salvage value",underline("10,000")),("Useful life",10"YEARS"):}` Depreication amount `=(Rs."5,50,000-Rs. 10,000")/(10)=Rs. "54,000 p.a"` |
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