Problems on PPE

Problem 1. X Ltd. acquired a machine on 1st January 2010 at a cost of Tk. 1,00,000. It was
estimated that the machine would have a useful life of 10 years having an estimated
scrap value of Tk. 10,000 at the end of 10th years. The company followed the
straight-line method of depreciation.

As on 1st January 2016, the life of the machine was reviewed and estimated at 9
Years from 1st January 2016.

Required : Pass journal entries for the year 2010 and 2016 after adjusting future
depreciation.

Problem 2. Change in depreciation resulting from additions and betterments:

Assets Cost Tk. 10,000
Estimated life 20 Years

After using the machinery for 15 years, an expenditure of Tk. 2,000 is made that
improve the machinery but does not prolong its useful life.

Required : Show journal entries with revised depreciation.

Problem 3. A Ltd. Company depreciates its machinery at 10% on diminishing balance method,
had on 1st January 2015 Tk. 3,50,000 to the debit of machinery account. A part of
machinery purchased on 1st January 2013 for Tk. 60,000 was sold for Tk. 30,000 on
1st July 2015. A new machinery at a cost of Tk. 70,000 was purchased and installed
on the same date, installation charge being Tk. 5,000. The company wanted to
change its method of depreciation from diminishing balance method to straight-line
method with effect from 1st January 2015. The rate of depreciation is remaining the
same.
Required : Pass journal entries for the year 2015.

Problem 4. X Ltd. acquired a machine at a cost of Tk. 1,50,000 on 1st January 2010 and charged
depreciation @ 10% per annum on straight line method. On 1 st July 2015, the
machine was sold.
Show the Journal entries on the date of sale if the sale price is @ Tk. 65,000 and @
Tk. 70,000.

Problem 5. Y Ltd. exchanged old office equipment for new office equipment. The book value of
the old equipment is Tk. 13,000 (cost 35,000 less accumulated depreciation Tk.
22,000). Its fair market value is Tk. 5,000, and cash of Tk. 40,000 is paid.

Required : Show the cost of new equipment and exchange with old equipment.