a computer purchased on 1st October 2022 440000 debited to office expenses account is to be brought into account on 31st March 2024 charging depreciation at 10% per annum returned on value basis pass journal entry
Question
a computer purchased on 1st October 2022 440000 debited to office expenses account is to be brought into account on 31st March 2024 charging depreciation at 10% per annum returned on value basis pass journal entry
Solution
Here is the step-by-step process to pass the journal entry for the given scenario:
Step 1: Identify the purchase date and cost of the computer The computer was purchased on 1st October 2022 for 440000. This amount is debited to the office expenses account.
Step 2: Calculate the depreciation Depreciation is charged at 10% per annum on a return on value basis. This means that the depreciation for each year is calculated on the remaining value of the asset after deducting the accumulated depreciation of the previous years.
Step 3: Determine the period for which depreciation is to be calculated The computer is to be brought into account on 31st March 2024. This means that depreciation is to be calculated for the period from 1st October 2022 to 31st March 2024, which is 1 year and 6 months.
Step 4: Calculate the depreciation for the period The annual depreciation is 440000 * 10% = 44000. Since the period is 1.5 years, the total depreciation is 44000 * 1.5 = 66000.
Step 5: Pass the journal entry The journal entry to record the depreciation is as follows:
Date: 31st March 2024 Debit: Depreciation Expense Account 66000 Credit: Accumulated Depreciation Account 66000
This entry records the depreciation expense for the period and increases the accumulated depreciation for the computer. The net book value of the computer on 31st March 2024 is 440000 - 66000 = 374000.
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