1.

Depreciation-Non current
2.Revenue
3.Inventory
4.Bank Reconcilation
5.Current Liabilities
6.Long term liabilities
7.Accounts Receivables
8.Accounting for lease
9.Accounting for installment sales
10.Royalty
11.Investment

BBA VISION
 Online Class
Financial Acc/Intermediate Acc
Depreciation
Problem – 01
Mihir and Company incurred the following expenses in purchasing a Delivery truck of 5
tons’ capacity with cash price of Tk. 6,00,000. Accident insurance Tk. 40,000. sales taxes
Tk. 30,000, motor vehicle license Tk. 2,000 and painting and lettering Tk. 8,000.
What is the cost for truck acquired?
Calculation the cost of the truck acquired
Particulars Tk. Tk.
Cash price 6,00,000
Add: Sales tax 30,000
Painting and letting 8,000 38,000
Total cost for acquired truck 6,38,000

Note: - Accident Insurance and license fee, won’t be added with the value of Assets.

Problem – 02
Expenditures given below were incurred by Matador company in purchasing land; cash
price Tk. 1,00,000, taxes Tk. 6,000, attorney's fees Tk.5,000, real estate brokers
commission charge Tk. 4,000 and clearing grading etc. Tk. 7,000.
What is the cost should be assigned to the value of land?
Calculation the value of land
Particulars Tk. Tk.
Cash Price 1,00,000
Add: Taxes 6,000
Attorney's fee 5,000
Clearing grading 4,000
Real-estate brokers 7,000 22,000
Total cost / Acquired cost for land 1,22,000

Problem – 03
Sumosi Manufacturing Company acquires a real estate at a cash price of Tk. 2,00,000.
The property contains an old warehouse that is removed at net cost of Tk. 6,000 (Tk.
7,500 in cost less Tk. 1,500 proceeds from salvaged materials). Additional expenditures &
the attorney's fee, Tk. 1,000 and the real estate broker's commission Tk. 8,000.
What is the cost of Land?
Calculation the cost of land
Particulars Tk. Tk.
Cash Price 2,00,000
Add: Removed net east 6,000
Attorney's fee 1,000
Broker,s commission 8,000 15,000
Total cost 2,15,000

Problem – 04
Abir Company purchased machine on July 1, 2010 for Tk. 4,00,000. The company paid Tk.
4,000 in title fees and county tax of Tk. 1,500 on the machine. In addition, the Company
paid Tk. 2,500 shipping charges for delivery, and Tk. 9,000 was paid to a local contractor
to build and wire a platform for the machine on the plant floor. The machine has an
estimated useful life of 6 years with a scrap value of Tk. 6,000.
Determine the deprecation base of Abir company's new machine. The company uses
straight line method for depreciation.

Calculation the base of Depreciation

Particulars Tk. Tk.
Purchase cost 4,00,000
Add: Title fees 4,000
Country tax 1,500
shipping charges 2,500
Contractor fee 9,000 17,000
Total cost 4,17,000
Less: Scrap Value 6,000
Base of Depreciation 4,11,000

Class No-02(13/01/21)
Problem – 05
Chan Company sells office equipment on September 30, 2010. for Tk. 20,000 cash. The
office equipment originally cost Tk. 72,000 and as of January 1, 2010, had accumulated
depreciation Tk. 42.000. Deprecation for the first 9 months of 2010 is Tk. 5,250.
Prepare the journal entries to (a) update depreciation to September 30, 2010. and (b)
record the sale of the equipment.
Req. (a)
Date Account titles Ref. Dr. Tk. Cr. Tk.
2010 Deprecation (Office equipment) 5,250
Sep. 30 Accumulated Depreciation 5,250
(b)
Date Account titles Ref. Dr. Tk. Cr. Tk.
2010 Cash 20,000
Sep. 30 Accumulated Depreciation (Office equipment) 47,250
Loss on sale of Asset 4,750
Office equipment 72,000

Problem – 06
Kelm Company purchased a new machine on October 1, 2010. at a cost of $1,20,000 the
company estimated that the machine will have a salvage of $ 12,000. The machine is
expected to be used for 10,000 working hours during its 5-year life.
Instructions:
Compute the depreciation expense under the flowing methods for the year
indicated.
a. Straight-line for 2010.
b. Units-of-activity for 2010, assuming machine usage was 1,700 hours &
c. Double Declining-balance using straight-line rate for 2010 and 2011
Problem – 06

Req. (a) Calculation Depreciation under straight line

We know,
Annual Depreciation =
 =
= 21,600
Depreciation for the year 2010 = 21,600 ×
= 5,400
Req. (b) Calculation Depreciation under Units of activity method
We know,
Depreciation per working hour =

=
= 10.8
Depreciation for the year 2010 = Yearly hours × Per hours
= 1,700 × 10.8
= 18,360 Tk.
Req. (c) Calculation Depreciation under Declining balance using double the straight line
rate for 2010 and 2011 We know,
Rate of Depreciation = ×2
= ×2
= 40%
Annual Depreciation for 2010 = Cost × Rate of Depreciation
= (1,20,000 × 40%) ×
= 12,000
Annual Depreciation for 2011 = (1,20,000 – 12,000) × 40%
= 43,200

Problem – 07
Prospective company acquired and placed into use equipment on January 1, 2008, at a
cost of Tk. 93,500. The transportation charge amounted to Tk. 750 and installation and
testing cost totaled Tk. 5,500. The equipment was estimated to have a useful life of 9
years and a salvage value of Tk. 3,750 at the end of its life. It was further estimated that
the equipment would be and in the production of 1,92,000 units of production during its
life. In 2008, 42,600 units of product were produced.
Required:
Prepare journal entries for the year ended 31 December, 2008 using:
• Straight-line method.
• Units -of-production method.
• Sum-of-the years-digits method.
• Double-decline-balance method.
Problem –07
Calculation the total cost of equipment:
Cost price 93,500
Add: Transportation cost 750
Testing cost / Installation cost 5,500
Total cost 99,750
Here / Given
Useful life = 9 years
Total cost = 99,750
salvage value = 3,750
Units of production = 1,92,000
* Straight line method

Annual Depreciation =

= 10,667
Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
1 Depreciation expense - Equipment 10,667
Accumulated Deprecation 10,667
2 Income summary 10,667
Depreciation expense 10,667
* Units of production Method:
We know,

Annual Depreciation = × yearly production

= × 42,600

= 21,300

Journal Entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
 1 Depreciation expense - Equipment 21,300
Accumulated Deprecation 21,300
2 Income summary 21,300
Depreciation expense 21,300
* Sum of the year’s digits Methods: -

We know, Total Digits =

= = = 45

Annual Depreciation = × yearly digit

= ×9

= 19,200

Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
1 Depreciation expense - Equipment 19,200
Accumulated Deprecation 19,200
2 Income summary 19,200
Depreciation expense 19,200
* Double - decline balance method: -

Rate of Depreciation = ×2

= 22.22%
Annual Depreciation = (99,750 × 22.22%)
= 22,164
Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
1 Depreciation expense - Equipment 22,164
 Accumulated Deprecation 22,164
2 Income summary 22,164
Depreciation expense 22,164

Class no-03(20/01/20)
Problem – 08
Younger Bus Lines uses the units-of-activity method in depreciating its buses. One bus
was purchased on January 1, 2010, at a cost of $ 1,68,000. Over its 4-year useful life, the
bus is expected to be driven 1,00,000 miles. Salvage value is expected to be $ 8,000.
Instruction:
a. Compute the depreciation cost per unit.
b.Prepare a depreciation schedule assuming actual mileage was: 2010, 26,000; 2011,
32,000; 2012, 25,000; and 2013, 17,000

Solve:-
(a) Calculation Depreciation under units of Activity
We know,
Deprecation per unit = {(Cost – SV) ÷ Total working hours}
= {(1,68,000 – 8,000) ÷ 1,00,000}
= 1.6
(b) Calculation depreciation schedule under units of A.C Method
Year Actual Miles×P. unit rate/ Annual Accumulated Book value
Yearly hours × hourly rate Depreciation Depreciation

2010 Jan. 1 - - - 1,68,000

2010 Dec. 31 26,000 × 1.6 41,600 41,600 1,26,400
2011 Dec. 31 32,000 × 1.6 51,200 92,800 75,200
2012 Dec. 31 25,000 × 1.6 40,000 1,32,800 35,200
2013 Dec. 31 17,000 × 1.6 27,200 1,60,000 8,000

Problem – 09(Schedule of depreciation)

Arafat company bought a machine for Tk. 15,00,000 on 1st July 2012. The company spent
Tk. 1,00,000 for installing the machine. The machine is expected to have a salvage value
of Tk. 60,000 at the end of its 10 years’ useful life.
Instructions:
(a) What is the cost of machine for accounting purposes?
(b) Prepare schedule of depreciation for 4 years using straight line method.
(c) Give the necessary entries for 4 years.

Solution
(i) Cost of machine for accounting purposes:
Purchase price of machine 15,00,000
Installation changes 1,00,000
Cost of machine of accounting purpose 16,00,000
(ii Annual depreciation =Cost – s.V /Useful life
=16,00,000-60,000/10
=1,54,000
Dep for 2012 = 1,54,000*6/12
=77,000
Arafat Company
Schedule of depreciation
Year Begining Annual Accumulated Ending balance
Balance(Tk.) Depreciation depreciation (Tk.)
(Tk.) (Tk.)
2012 16,00,000 77,000 77,000 15,23,000
2013 15,23,000 1,54,000 2,37,000 13,69,000
2014 13,69,000 1,54,000 3,85,000 12,15,000
2015 12,15,000 1,54,000 5,39,000 10,61,,000

(iii)
Arafat Company
Journal Entries
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2012 Machine 16,00,000
July 1 Cash 16,00,000
(To record cost of machine acquisition)
Dec. Depreciation expense 77,000
31 Accumulated depreciation Machine 77,000
(To record 6 months’ depreciation of
machine) 77,000
Dec. Income summary 77,000
31 Depreciation expense
(To close the depreciation expense account) 1,54,000
2013 Depreciation exp. 1,54,000
Dec. Accumulated depreciation
 31 (To record depreciation expense) 1,54,000
Income summary 1,54,000
Dec. Depreciation expense
31 (To close the depreciation expense account) 1,54,000
Depreciation expense 1,54,000
Accumulated Depreciation-Machine
2014 (To record depreciation of machine)
Dec. 1,54,000
31 Income summary
Depreciation expense
(To close the depreciation expense account 1,54,000

Problem – 08
Raju and Co. bought a machine on 1-1-2009 costing Tk. 6,00,000. The installation charges
were Tk. 40,000 and the estimated scrap value of the machine is Tk. 20,000. During 2009,
2010, 2011 and 2012, the machine was engaged in production for 6,000 hrs., 6,500 hrs.,
5,000 hrs., and 2,500 hrs., respectively.
Show the depreciation schedule for its 4 years’ life.
Solution

Cost of machine Tk. Total hours worked during 4 years:

6,00,000
= (6,000 + 6,500 + 5,000 + 2,500) hrs.
Add: Installation charges
= 20,000 hrs.
40,000
So, Depreciation per hour = (Tk. 6,20,000
Total cost of machine
÷ 20,000)
6,40,000
= Tk. 31
Less: Scrap value
20,000
* Depreciable value
6,20,000
Schedule of depreciation for 4 years’ life
Date Beginning Annual Dep Accumulated Ending
Amount =Hours Dep. (Tk.) Amount
1 2 Works*Dep.P.H 4 (Tk.
3 5=2-3
 2009 6,40,000 6,000*31=1,86,000 1,86,000 4,54,000
2010 4,54,000 6,500*31=2,01,500 3,87,500 2,52,500
2011 2,52,500 5,000*31=1,55,000 5,42,500 97,500
2012 97,500 2,500*31=77,500 6,20,000 20,000

Class no-04(24/01/21)
Depreciation

Problem – 11 [NU. - 2001, 07, 10, 11, 14]

Eastern Construction Company purchased a mixture machine on January 1, 2008 for Tk.
29,000. The machine is expected to base a useful life of 5 years and a residual value of
Tk. 2,000. The company engineer estimated that the mixture will have a useful life of
7,500 hours. It was used 1,500 hours in 2008, 2,625 hours in 2009, 2,250 hours in 2010,
750 hours in 2011 and 375 hours in 2012. The company's year-end is December 31. Year.
Required:
Compute the depreciation expense and carrying the value for 2008 to 2012. using
the three methods:
1. a) Straight line, b) production and c) double declining balance.
2. Adjusting entry to record the depreciation for 2008 calculated in 1.a.
Problem – 11
Given,
Cost Price = 29,000
Useful life = 5 years
Residual value = 2,000
Total production hours = 75,000
Req. – (a)
* Calculation Depreciation on straight line Method: -
We know, Annual Depreciation =
=
= 5,400
 Depreciation schedule
For 2008 to 2012
Years Depreciation Acc. Depreciation Carrying Amount
1 Jan. 2008 - - 29,000
31 Dec. 2008 5,400 5,400 23,600
31 Dec. 2009 5,400 10,800 18,200
31 Dec. 2010 5,400 16,200 12,800
31 Dec. 2011 5,400 21,600 7,400
31 Dec. 2012 5,400 27,000 2,000
Req. – (b)
* Calculation Depreciation on production method: -
We know, Per hour production cost =
=
= 3.6
Depreciation schedule
For 2008 to 2012
Years Yearly P. × Annual Acc. Carrying
Rate Depreciation Depreciation Amount
1 Jan. - - 29,000
2008
31 Dec. 1,500 × 3.6 5,400 5,400 23,600
2008
31 Dec. 2,625 × 3.6 9,450 14,850 14,150
2009
31 Dec. 2,250 × 3.6 8,100 22,950 6,050
2010
31 Dec. 750 × 3.6 2,700 25,650 3,350
2011
31 Dec. 375 × 3.6 1,350 27,000 2,000
2012
Req. – (c)
* Calculation of Depreciation on double declining Method:
We know, Rate of Depreciation = ×2
= ×2
= 40%
Annual Depreciation = Cost × Rate of depreciations
= 29,000 × 40% = 11,600
 Depreciation schedule
For 2008 to 2012
Years Beginning Annual Acc. Ending
Balance Depreciation=Cost*Dep. Depreciation Amount
Rate
31 Dec. 29,000 29,000*40%=11,600 11,600 17,400
2008
31 Dec. 17,400 17,400*40%=6,960 18,560 10,440
2009
31 Dec. 10,440 10,440*40%=4,176 22,736 6,264
2010
31 Dec. 6,264 6,264*40%=2,506 25,242 3,758
2011
31 Dec. 3,758 3,758*40%=1,758 27,000 2,000
2012
# In will be in first then Double declining এ সবশেষ বছশে আশে scrap value বসাশে হশব োেপশে
Book value থেশে বাদ দদশে Annual Depreciation বসশব এখাশে Rate (%) এে সাশে োও দিলশে পাশে।
Req. – (d)
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2008 1. Depreciation expense 5,400
Dec. 31 Accumulated Deprecation 5,400
2. Income summary 5,400
Depreciation expense 5,400

Problem – 12
The cost of equipment by APEX Ltd. on April 1, 2008 is Tk. 67,000. li is estimated that the
machine will have a TK. 4,000 salvage value at the end of its service life. Its Service life is
7 years; its total working hours estimated at 42,000 and its total production is estimated
at 5,25,000 units. During 2008 the machine was operated 6,000 hours and produced
55,000 units. During 2009 the machine was operated 5,500 hours and produced 48,000
unitsRequired:
Prepare journal entries for the year ended 31 December 2008 & 2009 using:
 Straight-line method.
 Units-of-production method.
 Sum-of the years-digits method.
 Double declining method.
 Working hour method.
 Problem – 12
 Given,
 Cost price = 67,000
 Salvage value = 4,000
 Useful life = 7 years
 Working hours = 42,000
 Total production = 5,25,000 units
* Straight line method: -
We know, Annual Depreciation =
=
= 9,000
Depreciation for the 2008 = 9,000 ×
= 6,750
Depreciation for the 2009 = 9,000
 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2008 1. Depreciation expense 6,750
Dec. 31 Accumulated Deprecation 6,750
2. Income summary 6,750
Depreciation expense 6,750
 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2009 1. Depreciation expense 9,000
Dec. 31 Accumulated Deprecation 9,000
2. Income summary 9,000
Depreciation expense 9,000
 * Units of Production Method: -
We know, Per hour production cost =
=
= 0.12
 Depreciation for the 2008 = Yearly production × per hour production
= 55,000 × 0.12
= 6,600
Depreciation for the 2009 = 48,000 × 0.12
= 5,760
 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2008 1. Depreciation expense 6,600
Dec. 31 Accumulated Deprecation 6,600
2. Income summary 6,600
Depreciation expense 6,600
 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2009 1. Depreciation expense 5,760
Dec. 31 Accumulated Deprecation 5,760
2. Income summary 5,760
Depreciation expense 5,760
 * Sum-of-the-year digits Method: -
Total Digits =
= = = 28
Depreciation cost =

=
= 2,250
Depreciation for 2008 = 2,250 × 7 ×
= 11,813
Depreciation for the 2009 = 2,250 × 7 ×
= 3,938
Depreciation for the 2009 = 2,250 × 6 ×
= 10,125
Total Dep. for (2009) = (3,938 + 10,125) = 14,063
Depreciation for the 2010 = 2,250*6*3/12
=
Depreciation for the 2010= 2,250*5*9/12
=

 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2008 1. Depreciation expense 11,813
Dec. 31 Accumulated Deprecation 11,813
2. Income summary 11,813
Depreciation expense 11,813
 Journal entry
 Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2009 1. Depreciation expense 14,063
Dec. 31 Accumulated Deprecation 14,063
2. Income summary 14,063
Depreciation expense 14,063
 * Double-decline-balance Method: -
Rate of Depreciation = ×2
= ×2
= 28.57%
Annual Depreciation = 67,000 × 28.57%
= 19,142
Depreciation for the 2008 = 19,142 ×
= 14,357
Depreciation for the 2009 =(67,000-14,357)= 52,643 × 28.57%
= 15,040
 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2008 1. Depreciation expense 14,357
Dec. 31 Accumulated Deprecation 14,357
2. Income summary 14,357
Depreciation expense 14,357
 Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2009 1. Depreciation expense 15,040
Dec. 31 Accumulated Deprecation 15,040
2. Income summary 15,040
15,040
Depreciation expense

Problem – 14
Hitech Company purchased machine on May 1, 2009. The following informs relating to
the machine was gathered at the end of May. 2009:
Price 1,00,000
Credit terms 2%/10, n/30
Freight-in-costs Tk. 1,000
Installation cost 4,000
Labor cost during regular production operations 10,000
It was expected that the machine could be used for 10 years after which the salvage
value would be zero. The company intends to use the machine for only 8 years, however,
after which it expects to be able to sell it for Tk. 2,000. The invoice for the machine was
paid on May 5, 2009. The company uses the calendar year as the basis for the
preparation of financial statements.
Required:
Compute the depreciation expenses for the years indicated using the following
methods:
1. Straight-line method for 2009.
2. Sum-of-years-digits method 2010.
3. Double-declining balance method for 2010.
Calculation total cost of machine: -
Cost price 1,00,000
(-) Discount (1,00,000 × 2%) 2,000
98,000
(+) Freight in cost 1,000
Installation cost 4,000
Total cost 1,03,000
1. Calculation Depreciation under straight line method: -
We know, Annual Depreciation =
=
= 12,625
Depreciation for 2009 = 12,625 ×
= 8,417
2. Calculation Sum-of-the-year digits Method: -
Total Digits =
= = = 36
Annual Depreciation (May 2009) = × yearly digits

={( × 8) × }
= 14,963
(2010) ={( × 8) × }
= 7,482
(2010) ={( × 7) × }
= 13,092
Depreciation for 2010 = (7,482 + 13,092)
= 20,574
3. Double - decline balance Method: -
Rate of Depreciation = ×2
= ×2
= 25%
Annual Depreciation (May 2009) = Cost × Rate of depreciations
= 1,03,000 × 25%
= 25,750 ×
= 17,167
Depreciation for 2010 = Written down × Rate
= (1,03,000 – 17,167) × 25%
= 21,458

Homework
Problem – 13
Modern Bricks Ltd. purchased machinery for Tk. 6,30,000 on May, 2005. It is estimated
that it will have a useful life of 10 years scrape value of Tk. 30,000, production of
4,80,000 units and working hours of 50,000. During 2006 Modern Bricks Ltd. Uses the
machinery for 5,300 hours and the machinery produces 51,000 units.
Instruction:
From the information given, compute the depreciation charge for 2006 under
each of the
following methods:
(1) a. Straight line.
b. Units of output
c. Working hours.
d. Sum of the years- digits
e. Reducing balance method (use 20% the annual rate)
(2) Pass journal equiseta record depreciation for all of the above methods.
 Class no-05(28/01/21)
Depreciation
Problem – 15
Mr. X purchased a machine on 1.1 2008 at a cost of Tk. 1,05,000 and spent Tk. 3,000 as
carrying charge and Tk. 7,000 as installation charge cost. The estimated life of the
machine is 10 years after which its break-up value (scrap value) will be Tk. 5,000.
Find out the amount of depreciation using straight line method and show the machine
account. depreciation account and accumulated depreciation for 1st three years
assuming that the year ends on 31, December and also show the exhibition of the
machine on the balance sheet on December 31, 2008.
Problem – 15
Given,
Cost Price = 1,05,000 + 3000 + 7,000 = 1,15,000
Salvage value = 5000
Useful life = 10 years and

We know, Annual Depreciation =

= 11,000
Dr. Machine Account
Cr.
Date Account Titles Tk. Date Account Titles Tk.
2008 Bank 1,15,000 2008 Balance C/d 1,15,000
Jan. - 1 Dec. - 31

2009 Balance B/d 1,15,000 2009 Balance C/d 1,15,000

Jan. - 1 Dec. - 31

2010 Balance B/d 1,15,000 2010 Balance C/d 1,15,000

Jan. - 1 Dec. - 31
Dr. Depreciation Account Cr.
Date Account Titles Tk. Date Account Titles Tk.
2008 Accumulated 11,000 2008 Income Summary 11,000
Depreciation
Dec. - Dec. -
31 31

11,000 Income Summary 11,000

2009 Accumulated 2009
Depreciation
Dec. - Dec. -
31 31
11,000 Income Summary 11,000

2010 Accumulated 2010

Depreciation
Dec. - Dec. -
31 31

Problem – 16
The Modern Company purchased a machine at the end of 1998 for Tk. 4,20,000. The
machine was being depreciated using the straight-line-method over an estimated life of
20 years, with a Tk. 60,000 salvage value. At the beginning of 2003, the company paid Tk.
1,00,000 to value the machine. As a result of this improvements, the company estimated
that the usefulness of the machine would be extended an additional 5 years, and salvage
value would be reduced to Tk. 40,000.
Required:
a. Compute the depreciation changes for 2003.
b. Show journal for depreciation expense for 2003.
Problem – 16
Given,
Cost price = 4,20,000
Estimated life = 20 years
Salvage value = 60,000
We know, Annual Depreciation =
=
= 18,000
Accumulated Depreciation (1999 - 2002) = 18,000 × 4
= 72,000
Book value of machine of the beginning of 2003 = Cost – Accumulate Depreciation
= 4,20,000 – 72,000
= 3,48,000
The price of machine in 2003 = (3,48,000 + 1,00,000)
= 4,48,000
Here, Useful life = 21 year.
S.V = 40,000
Req.: – (a)
Depreciation expense for 2003 =
= 19,429
Req.: – (b)
Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
1 Depreciation expense 19,429
Accumulated Deprecation 19,429
2 Income summary 19,429
Depreciation expense 19,429

Problem – 17
In 2008 a company acquired a coal mine at a cost of Tk. 6,00,000. The estimated reserve
of coal is 60,00,000 tons of which 80% is expected to be raised. The first three years
Raisings are 3,20,000 tons 4,48,000 tons and 4,00,000 tons-respectively and sold them
respective year.
Required:
a. Coal Mine Deposit Ledger Account
b. Depiction Expense-Coal Mine Deposit Account
c. Accumulated Depreciation-Coal Mine Deposit Account
Problem – 17
Given, Cost Price = 600,000
Total raised = (60,00,000 × 80%)
= 48,00,000 Tons
We know,
Per tons Annual Depreciation =

=
= 0.125
 Depreciation for 2008 = (3,20,000 × 0.125) / yearly tons
= 40,000
Depreciation for 2009 = (4,48,000 × 0.125)
= 56,000
Depreciation for 2010 = (4,00,000 × 0.125)
= 50,000
Req.: – (a)
Coal Mine Deposit
Leger Accounts
Date Account Titles Tk. Date Account Titles Tk.
2008 Bank 6,00,000 2008 Balance C/d 6,60,000
Jan. - Dec. -
1 31
Balance B/d 6,00,000 Balance C/d 6,00,000
2009 2009
Jan. - Dec. -
1 Balance B/d 6,00,000 31 Balance C/d 6,00,000

2010 2010
Jan. - Dec. -
1 31
1. Req.: – (b)
Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2008 1. Depreciation expense 40,000
Dec. 31 Accumulated Deprecation 40,000
2. Income summary 40,000
Depreciation expense 40,000
Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2009 1. Depreciation expense 56,000
Dec. 31 Accumulated Deprecation 56,000
2. Income summary 56,000
Depreciation expense 56,000
Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2010 1. Depreciation expense 50,000
Dec. 31 Accumulated Deprecation 50,000
2. Income summary 50,000
Depreciation expense 50,000
 Depreciation Expense
Dr. Coal Mine Deposit Leger Accounts
Cr.
Date Account Titles Tk. Date Account Titles Tk.
2008 Accumulated 40,000 2008 Income Summary 40,000
Dec. - Depreciation Dec. -
31 31
56,000 Income Summary 56,000
2009 Accumulated 2009
Dec. - Depreciation Dec. -
31 50,000 31 Income Summary 50,000

2010 Accumulated 2010

Dec. - Depreciation Dec. -
31 31

Problem – 18
On January 1, 2006, Glaxo Company purchased a machine for Tk. 72,000 cash. The
machine has an estimated useful life of 6 years and an estimated salvage value of Tk.
3,600. The company uses the Straight-Sine method of depreciation.
a. Compute the book value of the machine July 1, 2009.
b. Assume the machine was disposed of on July 1, 2009.
Prepare journal entries to record disposal of the machine under each of the
following unrelated assumptions:
2. The machine was sold for Tk. 24,000 cash.
3. The machine was sold for Tk. 36,000 cash.
4. The machine and Tk. 48,000 cash were exchanged for a new machine chat had
a cash price of Tk. 78,000.
5. The machine was completely destroyed by fire. The company expects to
recover cash of Tk. 21,600 from the insurance company.
6. Problem – 18
Given,
Cost price = 72,000
Useful life = 6 years
Salvage value = 36,000
We know, Annual Depreciation =
=
 = 11,400

Accumulated Depreciation (31-12-2006 to 31-06-2009) = 11,400 × 3.5

= 39,900
Req.: – (a)
Calculation of Book value of machine at July 2009 = Cost – Accumulate
Depreciation
= 72,000 – 39,900
= 32,100
1. Req.: – (b)
2. The machine was sold for Tk. 24,000 cash.
3. The machine was sold for Tk. 36,000 cash.
4. The machine and Tk. 48,000 cash were exchanged for a new machine that had
a cash price of Tk. 78,000.
5. The machine was completely destroyed by fire. The company expects to
recover cash of Tk. 21,600 from the insurance company.

6. Journal entry
Date Account Titles and Explanation Ref. Dr. Tk. Cr. Tk.
2009 1. Cash 24,000
July – 1 Accumulated Depreciation - Machine 39,900
Loss on Disposal 8,100
Machine 72,000
,, 2. Cash 36,000
Accumulated Depreciation - Machine 39,900
Gain on Disposal 3,900
Machine 72,000
,, 3. New Machine 78,000
Accumulated Depreciation - Machine 39,900
Loss on Disposal 2,100
Old Machine 72,000
Cash 48,000
 Insurance Receivable 21,600
,, Accumulated Depreciation - Machine 39,900
Loss on Disposal 10,500
Machine 72,000
7.

8.

Problem – 19 [NU. - 2013]

At December 31, 2013, Habib and Company reported the following as plant assets:

Taka Taka

Land 3,00,000

Buildings 2,65,00,000

Less: Accumulated Depreciation-Building 1,21,00,000 1,44,00,0000

Equipment 4,00,000,000

Less: Accumulated depreciation- equipment 5,00,00,000 3,50,00,000

5,24,00,000
Total Plant assets

During 2014, the following selected cash transaction occurred:

April 1 Purchased land for Tk. 22,00,000.

May 1 Sold equipment that cost Tk. 6,00,000 when purchased on January 1, 2010 The

equipment was sold for Tk. 3,60,000.

June 1 Sold land purchased on June, 2004 for Tk. 18,00,000. The land cost Tk. 6,00,000.

July 1 Purchased equipment for Tk. 18,00,000.

Dec. 31 Retired equipment that cost Tk. 5,00,000 when purchased on December 31,

2004. No salvage value was received.

Instructions:

a. Journalize the above transactions. Habib and company uses straight-line depreciation for buildings
and equipment. The buildings are estimated to have at 50-year useful life and on salvage value.
The equipment is estimated to have a 10-year useful life and no savage value. Update deprecation
on assets disposed of at the time of sale or retirement.

Problem –20 [NU. BBA - 2013]

Toyef Corporation operates of retail computer store. To improve delivery service to customers, the company
purchases four new trucks on April 1, 2012. The terms of acquisition for each truck are described below:

a. Truck #1 has a list price of Tk. 15,000 and is acquired for a cash payment of Tk. 13,900.
 b. Truck #2 has a price Tk. 16,000 and is acquired for a down payment of Tk. 2,000 cash and a non-
interest bearing note with a face amount of Tk. 14,000. The note is due April 1, 2013. Toyef would
normally have pay interest at a rate of 10% for such a borrowing, and the dealership has an
incremental borrowing rate of 8%
c. Truck #3 has a list price of Tk. 16,000. It is acquired in exchange for a computer system that is carries
inventory. The computer system cost Tk. 12,000 and is normally sold by Toyef for Tk. 15,200. Toyef
uses a perpetual inventory system.
d. Truck #4 has a list price of Tk. 14,000. It is acquired in exchange for 1,000 shares of common stock in
Toyef Corporation. The stock has a par value per share of Tk. 10 and a market price of Tk. 13 per
share.
Instruction:

Prepare the appropriate journal entries for Toeyf Corporation for the foregoing.

Problem – 21 [NU. BBA - 2007, 2012]

On December 31, 2006, Trust Company has a machine with a book value of Tk. 9,40,000. The original cost and
related accumulated depreciation at this date are as follows:

Taka

Machine 13,00,000

Accumulated depreciation 3,60,000

9,40,000

Depreciation is computed at Tk. 60,000 per year on a straight-line basis.

Instructions:

Presented below is a set of independent situations. For each independent situation, indicate the journal entry to
be made to record the transaction. Make sure that depreciation entries are made to update the book value of the
machine prior to its disposal.

a. A fire completely destroys the machine on August 31, 2007. An insurance settlement of Tk. 4,
30,000 was received for this casualty. Assume the settlement was received immediately.
b. On April 1, 2007, Trust sold the machine for Tk. 10,40,000 to Destiny company.
c. On July 31, 2007, Trust company donated this machine to the Dhaka city Corporation. the fair value
of the machine at the time of the donation was estimated to be Tk. 11,00,000.

Prepared by FARHAD Sir

BBA Honour’s Dhaka College (DU)
Cell No: 01710-767025