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  • Sangeeta Corporation

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    harishmtp1
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    The document contains accounting records for machines, depreciation expense, cash and accumulated depreciation accounts over multiple years. It also contains examples showing the effect of changing depreciation methods from cost price method to diminishing balance method and vice versa with retrospective effect from prior periods. The changes result in credits or debits to the profit and loss account to account for the net impact on financial statements from the change in depreciation method.

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    The document contains accounting records for machines, depreciation expense, cash and accumulated depreciation accounts over multiple years. It also contains examples showing the effect of changing depreciation methods from cost price method to diminishing balance method and vice versa with retrospective effect from prior periods. The changes result in credits or debits to the profit and loss account to account for the net impact on financial statements from the change in depreciation method.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    25 views8 pages

    Sangeeta Corporation

    Uploaded by

    harishmtp1
    The document contains accounting records for machines, depreciation expense, cash and accumulated depreciation accounts over multiple years. It also contains examples showing the effect of changing depreciation methods from cost price method to diminishing balance method and vice versa with retrospective effect from prior periods. The changes result in credits or debits to the profit and loss account to account for the net impact on financial statements from the change in depreciation method.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    Machine 1

    Debit
    Date Particulars Amount Date Particulars
    1-Apr-07 Cash 300000.00

    31-Mar-03 Balance c/d

    Machine 2
    Date Particulars Amount Date Particulars
    1-Oct-07 Cash 200000.00

    31-Mar-03 Balance c/d

    Depreciation Expense
    Date Particulars Amount Date Particulars
    31-Mar-08 Accumulated Depreciation 60000.00

    31-Mar-03 Balance c/d

    Cash
    Date Particulars Amount Date Particulars
    1-Apr-07 Machine 1
    1-Oct-07 Machine 2
    31-Mar-03 Balance c/d 500000

    Accumulated Depreciation
    Date Particulars Amount Date Particulars
    31-Mar-03 Depreciation Expense

    31-Mar-03 Balance c/d 6000

    Machine 1
    Debit
    Date Particulars Amount Date Particulars
    1-Apr-03 Balance b/d 300000.00 1-Jan-04 Cash
    1-Jan-04 Loss on sale of machinery
    1-Jan-04 Accumulated Depreciation
    31-Mar-04 Balance c/d

    Machine 2
    Date Particulars Amount Date Particulars
    1-Apr-03 Balance b/d 200000.00

    31-Mar-04 Balance c/d

    Depreciation Expense
    Date Particulars Amount Date Particulars
    1-Apr-03 Balance b/d 60000.00
    1-Apr-04 Accumulated Depreciation 7,500
    31-Mar-04 Balance c/d

    Cash
    Date Particulars Amount Date Particulars
    1-Apr-03 Balance b/d
    1-Jan-04 Machinery 1 30,000 1-Jul-08 Machine 3
    Balance c/d 570000 31-Mar-04

    Accumulated Depreciation
    Date Particulars Amount Date Particulars
    1-Jan-04 Machinery 1 1,500 1-Apr-03 Balance b/d
    1-Apr-04 Depreciation Expense
    31-Mar-04 Balance c/d 12000

    Machine 3
    Date Particulars Amount Date Particulars
    1-Jul-08 Cash 100000

    31-Mar-04 Balance c/d


    Credit
    Amount

    300000

    Amount

    200000

    Amount

    60000

    Amount
    300000.00
    200000.00

    Amount
    6000.00

    Credit
    Amount
    30,000
    55,000
    15,000
    200000

    Amount

    200000

    Amount

    67500

    Amount
    500000.00
    100000.00

    Amount
    6000.00
    7500.00

    Amount

    100000
    Effect of change in depreciation method

    Case 1: 20% CPM changed to 15% DBM in 2009 with retrospective effect from 2007

    Cost Price method


    Date Item Amount Months Rate Depreciation Net Value
    Jan-07 Machine 1 200,000 9 20 30000 170,000
    Jan-07 Machine 2 200,000 3 20 10000 190,000

    Jan-08 Machine 3 100,000 6 20 10000 90,000


    Jan-08 Machine 1 200,000 12 20 40000 130,000
    Jan-08 Machine 2 200,000 12 20 40000 150,000

    Jan-09 Machine 3 100,000 12 20 20000 70,000


    Jan-09 Machine 1 200,000 12 20 40000 90,000
    Jan-09 Machine 2 200,000 12 20 40000 110,000
    Total Depreciation 230000

    Diminishing Balance method


    Date Item Amount Months Rate Depreciation Net Value of Asset
    Jan-07 Machine 1 200,000 9 15 22500 177,500
    Jan-07 Machine 2 200,000 3 15 7500 192,500

    Jan-08 Machine 3 100,000 6 15 7500 92,500


    Jan-08 Machine 1 177,500 12 15 26625 150,875
    Jan-08 Machine 2 192,500 12 15 28875 163,625

    Jan-09 Machine 3 92,500 12 15 13875 78,625


    Jan-09 Machine 1 150,875 12 15 22631.25 128,244
    Jan-09 Machine 2 163,625 12 15 24543.75 139,081
    Total Depreciation 154050

    Net Impact on Financial Statements -75,950


    75,950 needs to be credited to the P/L account
    Case 2: 20% DBM chaged to 15% CPM in 2009 with retrospective effect from 2007

    Diminishing Balance Method


    Date Item Amount Months Rate Depreciati Net Value
    Jan-07 Machine 1 200,000 9 20 30000 170,000
    Jan-07 Machine 2 200,000 3 20 10000 190,000

    Jan-08 Machine 3 100,000 6 20 10000 90,000


    Jan-08 Machine 1 170,000 12 20 34000 136,000
    Jan-08 Machine 2 190,000 12 20 38000 152,000

    Jan-09 Machine 3 90,000 12 20 18000 72,000


    Jan-09 Machine 1 136,000 12 20 27200 108,800
    Jan-09 Machine 2 152,000 12 20 30400 121,600
    Total Depreciation 197600

    Cost Price Method


    Date Item Amount Months Rate Depreciati Net Value
    Jan-07 Machine 1 200,000 9 15 22500 177,500
    Jan-07 Machine 2 200,000 3 15 7500 192,500

    Jan-08 Machine 3 100,000 6 15 7500 92,500


    Jan-08 Machine 1 200,000 12 15 30000 147,500
    Jan-08 Machine 2 200,000 12 15 30000 162,500

    Jan-09 Machine 3 100,000 12 15 15000 77,500


    Jan-09 Machine 1 200,000 12 15 30000 117,500
    Jan-09 Machine 2 200,000 12 15 30000 132,500
    Total Depreciation 172500

    Net Impact on Financial Statements -25,100


    25,100 needs to be debited to the P/L account
    Case 3: 15% CPM changed to 20% DBM in 2009 with immediate effect

    Cost Price Method


    Date Item Amount Months Rate Depreciati Net Value
    Jan-07 Machine 1 200,000 9 15 22500 177,500
    Jan-07 Machine 2 200,000 3 15 7500 192,500

    Jan-08 Machine 3 100,000 6 15 7500 92,500


    Jan-08 Machine 1 200,000 12 15 30000 147,500
    Jan-08 Machine 2 200,000 12 15 30000 162,500

    Jan-09 Machine 3 100,000 12 15 15000 77,500


    Jan-09 Machine 1 200,000 12 15 30000 117,500
    Jan-09 Machine 2 200,000 12 15 30000 132,500
    Total Depreciation 172500

    Diminishing Balance Method


    Date Item Amount Months Rate Depreciati Net Value
    Jan-09 Machine 3 92,500 12 20 18500 74,000
    Jan-09 Machine 1 147,500 12 20 29500 118,000
    Jan-09 Machine 2 162,500 12 20 32500 130,000
    Total Depreciation 178000

    Net Impact on Financial Statements 5,500


    -5,500 needs to be credited to the P/L account
    Date Account Name Debit Credit
    1-Apr-07 Machine 1 300,000
    Cash 300,000

    1-Oct-07 Machine 2 200,000


    Cash 200,000

    31-Mar-08 Depreciation Expense 60000.00


    Accumulated Depreciation 60000.00

    1-Jul-08 Machine 3 100,000


    Cash 100,000

    1-Jan-09 Accumulated Depreciation 15000


    Cash 30,000
    Machine 1 (sold) 100,000
    Loss on sale of Machinery 55,000.00

    31-Mar-09 Depreciation Expense 75000


    Accumulated Depreciation 75000

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