A company had purchased machinery for 100000 including a boiler of 100

1.	A company had purchased machinery for 100000 including a boiler of 10000. This machinery account for the first four years was credited for depreciation on the Reducing balance method @10%p.a.During the fifth year,i.e., the current year the boiler becomes useless on account of damage to its parts. The damaged boiler is sold for 2000 which amount is credited to the machinery account. Prepare Machinery Account for the current year, adjusting therein the cash received and the loss suffered on the damaged boiler and the depreciation of Machinery for the current year ?
Answer» Answer: It is assumed that in the beginning of the 5TH year boiler became useless on account of damage to some of its vital parts. 2. Calculation of Depreciation for 5th year: Balance of remaining MACHINERY (Book VALUE) in the beginning of 5th year = RS 1,31,220-Rs 13,122 (Book Value of Boiler) = Rs 1,18,098 Hence, Ddepreciation for the 5th year = Rs 11,810 (to the nearest RUPEE).

A company had purchased machinery for 100000 including a boiler of 10000. This machinery account for the first four years was credited for depreciation on the Reducing balance method @10%p.a.During the fifth year,i.e., the current year the boiler becomes useless on account of damage to its parts. The damaged boiler is sold for 2000 which amount is credited to the machinery account. Prepare Machinery Account for the current year, adjusting therein the cash received and the loss suffered on the damaged boiler and the depreciation of Machinery for the current year ?

Answer»

Answer:

It is assumed that in the beginning of the 5TH year boiler became useless on account of damage to some of its vital parts.
2. Calculation of Depreciation for 5th year:
Balance of remaining MACHINERY (Book VALUE) in the beginning of 5th year
= RS 1,31,220-Rs 13,122 (Book Value of Boiler) = Rs 1,18,098
Hence, Ddepreciation for the 5th year

= Rs 11,810 (to the nearest RUPEE).

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