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Sumon Enterprise purchased a factory machine at a cost of Tk. 17,000 on January 1,...

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Accounting

Sumon Enterprise purchased a factory machine at a cost of Tk. 17,000 on January 1, 2020. Its set-up cost was Tk. 1,000. It expected the machine to have a salvage value of Tk. 2,000 at the end of its 4-year useful life. Sumon applied the double-declining balance method. The enterprises accounting period ends on 31 December each year.

Required:

a) Prepare depreciation schedule for 4-year useful life using double the straight-line rate. For doing this, you need to calculate the declining balance rate first.

b) Prepare the journal entries to record depreciation and disposal assuming that the machine was sold for Tk. 2,000 on 31 December, 2022. No explanation is required for the journal entries.

c) Depreciation, depletion and amortization expense are same. Evaluate the statement critically.

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