Q2 10 Marks

Analyse the effect of each of these transactions on the Property, Plant and Equipment Accounts, Accumulated Depreciation,
and any other accounts that may be involved. Give the correct totals for Property, Plant and Equipment, and
the amount of accumulated depreciation as on 31st December 2020 after the transactions affecting them had been recorded.
Transactions
1. On January 02, 2020, one of the factory machines was sold for its book value, Rs. 3,866. This machine was recorded on the b
at Rs. 31,233 with accumulated depreciation of Rs. 27,367.
2. Tools were carried on the books at cost, and at the end of each year a physical inventory was taken to determine what tools
still remained. The account was written down to the extent of the decrease in tools as ascertained by the year end inventory.
as the end of 2020, it was determined that there had been a decrease in the tool inventory amounting to Rs. 7,850.
3. On March 01, 2020, the company sold for Rs. 2,336 cash an automobile that was recorded on the books at a cost of Rs. 8,35
had an accumulated depreciation of Rs. 5,180, giving a net book value of Rs. 3,174 as of January 01, 2020. In this and other cas
of the sale of long-lived assets during the year, the accumulated depreciation and depreciation expense items were both
increased by an amount that reflected the depreciation chargeable for the months in the year 2020 in which the asset was
held prio to the sale, at rates listed in the item no. 7 below.
4. The patent listed on the balance sheet had been purchased by the firm. The cost of the patent was written off as an expens
over the remainder of its legal life as of December 31, 2019, the patent's remaining legal life was five years.
5. On July 01, 2020, a typewriter that had cost Rs. 1,027 and had been fully depreciated on December 31, 2019, was sold for R
6. On October 01, 2006, the company sold a desk for Rs. 80. This piece of furniture was recorded on the books at a cost of Rs.
with an accumulated depreciation of Rs. 395 as of January 01, 2020.
7. Depreciation Rates: Buildings 2%, Factory Machinery 10% (included in the factory machinery cost of Rs. 34,25,585 was a ma
costing Rs. 85,000 that had been fully depreciated on December 31, 2019, and that was still in use). Furniture and Fixtures 10%
Automotive Equipment 20% and Office Machines 10%.
 Accumulated Depreciation,
ipment, and
ting them had been recorded.

machine was recorded on the books

taken to determine what tools

ed by the year end inventory.
unting to Rs. 7,850.
the books at a cost of Rs. 8,354 and
01, 2020. In this and other cases
expense items were both
020 in which the asset was

t was written off as an expense

s five years.
mber 31, 2019, was sold for Rs. 75.
d on the books at a cost of Rs. 490

cost of Rs. 34,25,585 was a machine

se). Furniture and Fixtures 10%