Reference no: EM132626272

XYZ Limited company is a publishing house that deals with publishing books. It purchased a piece of four -colour printing machine from Italy with a list price of $50,00,000 on January 1, 2018 which was expected to last 5 years with a salvage value of $.800,000. The following facts were related to the printing machine purchase:

1. Terms of the purchase were 2/ 10, net 30. XYZ paid for the purchase of machine on 9th of January, 2018.
2. Freight costs including shipping charge of Rs. 50,000 were incurred.
3. A metro urges to install a fire-protection device on the machine at a cost of $. 15,000.
4. Technician fees of $.5000 were paid to set up the machine.
5. XYZ took 5-year insurance policy of $.30,000 on 10th of January.
6. XYZ financed the purchase of machine with a bank loan of Rs.20,00,000 and interest on that loan was paid $. 240,000 during 2018.

Required:

Question a. Justify capital expenditures and revenue expenses related to above printing machine of Benchmark.

Question b. Acquisition cost of printing machine.

Question c. Treatment of revenue expenses under accounting process during 2018.

Question d. Depreciation charged on machine under straight line method for 2018 and 2019.

Question e. Present of printing machine on 31 Dec. 2018 on balance sheet.

Question f. If XYZ repaired the machine with a cost of $. 25,000 on 1 January, 2020 and expected an increase in life by 2 years more, how much amount of depreciation would be charged in 2020 and onwards?

Question g. How much amount of tax could be deferred by adopting double declining balance method of depreciation in 2018 under 25 % tax rate?