Assume that Hider Darwesh Company purchased a Machine for OMR 25000 on 31st December 2013.The company charging OMR 3125 depreciation per annum by following straight-line depreciation method. The company charged total depreciation till 31December 2017 is OMR 12500 and the company decided to sell this equipment for OMR 13000 on 31st Mar2018. Findout the profit or loss on sale of Machine and pass necessary journal entry in the books of Hider Darwesh Company. a. Dr Cash A/C 13000 Dr Accumulated depreciation A/c 13281and Cr Profit on sale of machine 1281 Cr Machinery A/C 25000 b. Dr Cash A/C 13000 Dr Accumulated depreciation A/c 13300and Cr Profit on sale of machine 1300 Cr Machinery A/C 25000 c. None of the given options d. Dr Cash A/C 13000 Dr accumulated depreciation 13000 and Cr Profit on sale of machinery OMR 1000 Cr Machinery A/C 25000 Clear my choice
Assume that Hider Darwesh Company purchased a Machine for OMR 25000 on 31st December 2013.The company charging OMR 3125 depreciation per annum by following straight-line depreciation method. The company charged total depreciation till 31December 2017 is OMR 12500 and the company decided to sell this equipment for OMR 13000 on 31st Mar2018. Findout the profit or loss on sale of Machine and pass necessary journal entry in the books of Hider Darwesh Company. a. Dr Cash A/C 13000 Dr Accumulated depreciation A/c 13281and Cr Profit on sale of machine 1281 Cr Machinery A/C 25000 b. Dr Cash A/C 13000 Dr Accumulated depreciation A/c 13300and Cr Profit on sale of machine 1300 Cr Machinery A/C 25000 c. None of the given options d. Dr Cash A/C 13000 Dr accumulated depreciation 13000 and Cr Profit on sale of machinery OMR 1000 Cr Machinery A/C 25000 Clear my choice
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.5E: Change in Estimate Assume that Bloomer Company purchased a new machine on January 1, 2016, for...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Assume that Hider Darwesh Company purchased a Machine for OMR 25000 on 31st December 2013.The company charging OMR 3125 depreciation per annum by following straight-line depreciation method. The company charged total depreciation till 31December 2017 is OMR 12500 and the company decided to sell this equipment for OMR 13000 on 31st Mar2018. Findout the profit or loss on sale of Machine and pass necessary journal entry in the books of Hider Darwesh Company.
a.
Dr Cash A/C 13000 Dr Accumulated depreciation A/c 13281and Cr Profit on sale of machine 1281 Cr Machinery A/C 25000
b.
Dr Cash A/C 13000 Dr Accumulated depreciation A/c 13300and Cr Profit on sale of machine 1300 Cr Machinery A/C 25000
c.
None of the given options
d.
Dr Cash A/C 13000 Dr accumulated depreciation 13000 and Cr Profit on sale of machinery OMR 1000 Cr Machinery A/C 25000
Clear my choice
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