Q No$.3$:

On $1^{st}$ March, $2001,$ ABC & Co imported machine from Italy at Rs$\mathrm{.}1256,000,$ In addition to its purchase

price, company also paid the following Expenses related to its purchase.

Paid freight charges Rs$.75000.$

Insurance in transit Rs$.25000.$

Co$.$ also paid import duty Rs$\mathrm{.}235,000$ and transportation charges Rs$\mathrm{.}5000.$

On its way from airport to office premises, a challan of Rs$\mathrm{.}1,000$ was paid to traffic police for

breaking the traffic rule.

Foundation and installation cost incurred Rs$.125,000.$

Test run cost incurred Rs$\mathrm{.}15,000.$

An amount of Rs$\mathrm{.}10,000$ has been paid to insurance company on account of fire insurance for $3$

years.

Estimated life of the machine is $20$ years and Expected scrap value is Rs$\mathrm{.}250,000.$

Required:

Compute total cost of the machine.

Compute depreciation Expense under following methods for three years: $(2001-03)$

Straight line method

Diminishing balance method$($ rate $20\%)$

Pass necessary journal entries for cost of machine & depreciation Expense charged each year.

Prepare ledgers for Machine Account, Depreciation Account & Accumulated Depreciation Account.

Prepare partial balance sheet for $3$ years. $(2001$ to $2003)$

Suppose if the machine was sold at the end of year $2002$ at a value of Rs$\mathrm{.}14,00,000.$ Record the

journal entry for the disposal of the machine.

On December $2002,$ suppose if the machine was exchanged with a new machine costing Rs$\mathrm{.}20,00,000.$

Trade$-$in$-$allowance of old machine was agreed as Rs$\mathrm{.}10,00,000.$ Pass journal entry for the gain or

disposal of machine.