3. On 1st January 1998, a merchant purchased a furniture costing Rs. 55,000. It is estimated that its working life is 10 years at the end of which it will fetch Rs. 5000. Additions are made on 1st January, 1999 and 1st July, 2001 to the value of Rs. 9500 and Rs. 8400 (Residual values Rs. 500 and Rs. 400 respectively). Show the Furniture Account for the \ufb01rst four years, if depreciation is written o\ufb00 according to the straight line method.
It was proposed to form a company to acquire business. For the purpose of the acquisition, the Assets were revalued as under: Plant Rs. 64000; Furniture Rs. 4500; Stock Rs. 45000; Debtors Rs. 28500; Prepaid expenses Nil.
It was ascertained that the pro\ufb01ts before charging remuneration for partners for the past \ufb01ve years has been as follows: Rs. 25,000 : Rs. 30,000 ; Rs. 28,000 ; Rs. 32,000 ; Rs. 35,000. Included in these pro\ufb01ts were non-recurring items averaging Rs. 3000 but from the nature of the business such income was found to arise every year and the promoters agreed that a \ufb01gure of Rs. 1,000 should be allowed as Pro\ufb01t from this source.
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