Exercise number 1
On 01/01/2010, Al-Melhem Company imported a machine from China, the value of which on the invoice was $10,000, and the following expenses were paid for it until it was ready for use:
On 01/01/2010, Al-Melhem Company imported a machine from China, the value of which on the invoice was $10,000, and the following expenses were paid for it until it was ready for use:
Shipping charges $500
$300 customs fee
Sales tax of $1,000
Installation costs $200
Its useful life was estimated at four years, and its value as scrap was $2000. On 01/01/2012, the company replaced the old spare parts with new ones that cost $2,800. The company decided to re-estimate its useful life instead of four years to become 5 years. On 01/01/2013 it sold The machine company has a value of $6,000, so if you know that the company uses the straight-line method in depreciating its assets, and that all payments are in cash.
$300 customs fee
Sales tax of $1,000
Installation costs $200
Its useful life was estimated at four years, and its value as scrap was $2000. On 01/01/2012, the company replaced the old spare parts with new ones that cost $2,800. The company decided to re-estimate its useful life instead of four years to become 5 years. On 01/01/2013 it sold The machine company has a value of $6,000, so if you know that the company uses the straight-line method in depreciating its assets, and that all payments are in cash.
Required :
Record consumption restrictions and other restrictions for all years.
Extract the net book value of the machine at the end of each year as it appears in the budget
Solution method:
First: First year 2010:
1 On 01/01/2010, the cost of the machine is recorded in the books, which is equal to the cost of purchasing it, in addition to all the expenses incurred on it until it is ready for use.
Which equals (10000 + 500 + 300 + 1000 + 200 = 12000$)
Machine depreciation premium = 12,000 - 2,000 = 2,500
4
2 At the end of the year 2010, i.e. on 31/12/2010, the depreciation premium is extracted as follows:
The next entry is made on 12/31/2010
3 The net book value of the machine appears in the statement of financial position for the year 31/12/2010 as follows:
List of financial position for the year 2010
Second: The second year 2011:
1 In the second year, i.e. on 31/12/2011, the depreciation entry is recorded as in the first year, so the total accumulated depreciation becomes equal to (2500 + 2500 = 5000 $),
The net book value of the machine on 12/31/2011 appears as follows:
List of financial position for the year 2011
Third: Third year 2012:
1 On 01/01/2012, the entry for the purchase of new parts, which are charged to the cost of the machine, is established and recorded as follows:
New Depreciation Premium = (7000 + 2800) - 2000 = 2600
3
2 On 12/31/2012, the new depreciation premium is extracted as follows:
The following entry is recorded on 31/12/2012:
Debtor creditor statement
2600
of h/m. machine consumption
2600
of h/m. machine consumption
2600 to h/combined machine consumption
New machine depreciation premium
3 The net book value of the machine will appear in the statement of financial position until 12/31/2012 as follows:
List of financial position for the year 2012
The amount of assets, the amount of liabilities, and equity
The amount of assets, the amount of liabilities, and equity
Fixed assets
14800 Machine(12000+2800)
(7600) machine consumption complex (2600 + 5000)
7200 machine net
xxx total assets xxx total liabilities and equity
Fourth: Fourth year 2013:
Fourth: Fourth year 2013:
1 On 01/01/2013 when the company sells the machine, the machine account and the accumulated depreciation account are closed, as well as the profit or loss realized from the sale is recorded by comparing the net book value of the machine with the selling price, which will be equal to 6000-7200 = $1200 (loss), so the closing entry is recorded the next:
Debtor creditor statement
of those mentioned
6000
h/ the fund
7600
h/ Consumption Complex
1200
H/ losses from selling the machine
14800 to h/machine
Sell the machine and prove the loss
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