Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. q2. best ltd purchased new machinery with a recomm

Q2. Best Ltd Purchased New Machinery with a recommended retail price of $ 6,00,000 on...

60.1K

Verified Solution

Question

Accounting

Q2.

Best Ltd Purchased New Machinery with a recommended retail price of $ 6,00,000 on 1 July 2021.

In addition to the purchase price, the company had to pay $25,000 for freight and the insurance and $ 35,000 for the installation fees. The company took advantage of settlement discount of 5% offered by the supplier and paid for the machine within the time. The machinery was expected to be used consistently for 10 years, with the residual value of $ 30,000.

After 5 years, on 1 July 2026, the machinery had major maintenance costing $5,000. At the same time, an extra $1,50,000 was spent on extending the capacity of the machinery to produce more quantity per day. This was expected to extend its entire useful life by 3 years and the residual value remained at $ 30000.

  1. Determine the amount at which the machinery would be recorded in the accounts as its acquisition.
  2. Explain how the expenditure after five years (i.e 1.7.26) would be treated.
  3. Calculate the depreciation expenses on the machinery for the year ended 30th June 2027.
  4. Prepare the journal entries for the depreciation on 30th June 2027.
  5. How would machinery appear on the balance sheet as of 2027.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

What is the 20th term of the expansion (c- d)^35?

Finance
1.2K views

A Treasury bill purchased in December 2016 has 115 days until maturity and a bank discount...

Biology
1.2K views

In Drosophila the hunchback gene encodes a protein HB that is required in the correct...

Algebra
1.2K views

Sketch each of the following angles in standard position.1) ? = -2?/32) ? = 11?/63)...

Accounting
1.2K views

Longobardi Corporation bases its predetermined overhead rate on...

Accounting
1.2K views

stedement for the bige pump follows: "Cominon oosts allocated on the tesis of machne hou/s....

Accounting
1.2K views

Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices...

Accounting
1.2K views

When a company declares dividends, it will A. Not change net income. B. Increase net...

Accounting
1.2K views

help, please show all work, the full question is in the photos. Laker Incorporated's fiscal...

Finance
1.2K views

The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value...

Accounting
1.2K views

Red, White, and Blue are unrelated corporations engaged in real estate development. The three corporations...

Finance
1.2K views

TASK SUMMARY You are required in the role of Operations Manager to develop: A...