Can you explain for me how to get - accumulated depreciation for machinery at :2
ID: 1170119 • Letter: C
Question
Can you explain for me how to get - accumulated depreciation for machinery at :26960 ??? QUESTION 6 e machine had a recommended retail On 1 July 2015 Engineering Pty. Ltd purchased a new machine. Th price of $75,500 plus 10% GST but after careful negotiation it was p chased for S74,000, plus 10% GST. The delivery of the machine cost $550 (GST included), and instalflation was s990 (GST included) All outlays were paid in cash. The cutting machinery is to be depreciated using the straight-line method over a useful life of 5 years with an estimated residual value of S8,000. The financial year closes on June 30 each year. 6óo ttal) REQUIRED: 1546 a) Prepare journal entries to record the purchase of the machinerý on 1 July 2015. (Narrations not required) b) Assume that on 1 July 2017 the company paid $2,750 (GST included) for the installation of a special trimming tool to the machine to improve productivity. There was no change to the useful life or residual value of the cutting machine. Prepare the necessary journal entries to record the addition of the trimming tool. a) 1 July . D) Machin y arros -7%. ch cush abeo 3 2940 Aumulated depreva ti26% 261b Page 4 of 4 Cr: Machine Ma chine 2560 CashExplanation / Answer
Solution:-
The GST will not be included in the total cost of machine, since we will get input tax credit of that, hence GST paid will not be capitalized in the books of account.
Calculation of amount to be capitalize in the books of account:-
Purchase price of machine = $74,000
Delivery cost excluding GST =$500
($550/110%)
Installation cost excluding GST=$900
(990/110%)
Total amount to be capitalized= 74000+500+900=$75,400
Calculation of depreciation:-
Annual depreciation
=[Total amount capitalized (i.e cost)-Residual value]/Life of machine
=($75,400-$8000)/5
=$13480
Depreciation for year ended 30-06-2016= $13480
Depreciation for the ended 300-06-2017=$13480
Accumulated depreciation on 30-06-2017
= Depreciation of 30-06-2016+Depreciation of 30-06-207
=$13,480+$13480=$26,960
Note:- I have not done others parts since you only ask for the accumulated depreciation part .
Please feel free to ask if you have any query in the comment section.
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