An asset was purchased on 1st January 2016 from sialkott at cost of Rs. 95,000. Rs.

10,000 was paid for

transportation to bring that asset to factory at Lahore. It need to get a fitness certificate so need additional
repairs at cost of Rs. 12,000 and was made. After wards Rs. 10,000 was paid to an engineer to get fitness
certificate. It is estimated that the useful life of machinery will be 5 years and it may be sold for Rs. 17,000
at the end of usefull life. Requirments 1. Prepare depreciation schedule a. streght Line Method b. double
Declining Method (RV Rs. 16,000) 2. Prepare entries if the asset is sold at teh end of year 2018 at a.
Rs.20,000 and b. Rs. 40,000
Streight Line Cost-Residual Value /life Date Account title Debit
Year Depreciation acc Depreciation Book value 1 31-Dec-18 Cash 20000
2016 22000 22000 105000 Acc Dep 66000
2017 22000 44000 83000 Loss on sale 41000
2018 22000 66000 61000 Machinery
2019 22000 88000 39000
2020 22000 110000 17000 2 31-Dec-18 Cash 40000
Accc Dep 66000
Loss on sale 21000
Machinery

Double declining rate = 1/life x 200 40 Date Account title Debit

Year Depreciation acc Depreciation Book value 1 31-Dec-18 Cash 20000
2016 50800 50800 76200 Acc Dep 99568
2017 30480 81280 45720 Loss on sale 7432
2018 18288 99568 27432 Machinery
2019 10973 110541 16459
2020 459 111000 16000 2 31-Dec-18 Cash 40000
Acc Dep 99568
Gain on sale
Machinery
Credit

127000

127000

Credit

127000

12568
127000