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What is the actual amount of asset that will be recorded

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Question - Punjab University purchased five generators with the following cost:

1. One generator costs Rs. 50,000.

2. Paid sales tax on total purchases equal to 15,000.

3. Freight in charges for delivery of generators amounted to Rs. 5,000

4. Installation charges per generator Rs. 5,000.

Required -

a) What is the actual amount of asset that will be recorded in the books of University? Also record its entry.

b) Now suppose that university decides to depreciate it at reducing balance method @ 35%. require is depreciation schedule using reducing balance method for 4 years. What will be the book value and accumulated depreciation after 4 years? Pass journal entries in the books of university for the first four years and show how will the asset appear in the balance sheet?

Suppose after the end of four years (assuming reducing balance method), the asset will be sold out for Rs.150,000. Pass the entry of profit/loss only at the end of four year?

 

Reference no: EM132652174

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