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Where accumulated Depreciation appears - b/s or p&l. please
provide journal entry while accumulating and also while
using the fund for purchase of new assets.
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Answer / seetharaman
Acc dep will be deducted from gross block of FA in B/S, and
it will not come anywhere in p&l
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / anshita dutta
When accumulating depreciation...
P&l a/c ....dr
To acc dep a/c
When using for purchase /sales of asset
Acc dep a/c ....dr
To asset a/c
| Is This Answer Correct ? | 0 Yes | 0 No |
Answer / amar
Deprecation show in expenses side in P&L and deduct value in assets,this journal entry :
deprecation a/c dr.
to Assets
| Is This Answer Correct ? | 1 Yes | 2 No |
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DHPL is a small sized firm manufacturing hand tools. It manufacturing plan is situated in haryana. The company's sales in the year ending on 31st march 2007 were Rs.1000 million(Rs.100 crore) on an asset base of Rs.650 million. The net profit of the company was Rs.76 million. The management of the company wants to improve profitability further. The required rate of the company is 14 percent.The company is currently considering an investment proposal. One is to expand its manufacturing capacity. The estimated cost of the new equipment is Rs.250 million. It is expected to have an economic life of 10 years. The accountant forecasts that net cash inflows would be Rs.45 million per annum for the first three years, Rs.68 million per annum from year four to year eight and for the remaining two years Rs.30 million per annum. The plant can be sold for Rs.200 million: (a) The company can borrow funds from a nationalized bank at the interest rate of 14 percent for 10 years. It will be required to pay equal annum installment of interest and repayment of principal. (b) A financial institution has offered to lend money to DHPL at 13.5 per annum but it needs to pay equated quarterly installment of interest and repayment of principal. Questions: (1) Should the company expand its capacity? show the computation of NPV. (2) What is the annual installment of bank loan? (3) calculate the quarterly installment of the financial institution loan. (4) should the company borrow from the bank of from the financial institution?
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