how to calculate profit or loss in the machinery account ?

need all the steps...!

calculate the book value as on the date of sale of machinery.

deduct depriciation, if any till the date of sale.

deduct the sales price of the machinery sold.

if the balance comes out the negative figure, its the profit and it will be shown on the debit side of machinery a/c.

if the balance is a positive figure, it is the loss on machinery sold and it will be shown on the credit side of machinery a/c.

  • 5
net book value - selling price
 
  • 2
How find book value
  • 0
book value= original cost of asset--depriciation till date
  • 2
Calculate depriciation on machinery from year to year from the date of purchase till the the date of sale , then reduce it from the original cost of machinery , then detuct amount of sale from it you will get profit or loss on machinery
  • 4
@vandana thx for the answer
  • 2
It's the amount you're left with after remaining working expenses are deducted from gross profit. To calculate net profit, follow this path: Deduct discounts and allowances from your gross income (excluding VAT) to get your net income. Deduct the cost of sales from your net incomes to find your gross profit.
  • 0
subract sale value from depreciated amount of the asset
  • 0
step 1 calculate the total deprication and write it on the credit side on diposal account. step2 write the amount at which we have purchased the machinery on debit side. step3. write the amount at which we are selling the machinery on credit side. step 4 calculate the total if the debit is greater then there is loss and if short then profit. profit will be on debit side
  • 1
Determine?the cost of the asset. Subtract the estimated salvage value of the asset from the cost of the asset to get the total depreciable amount.?Determine?the useful life of the asset. Divide the sum of?step?(2) by the number arrived at instep?(3) to get the annual depreciation.
  • 0

As per Accounting Standard no. 6: Accounting for depreciation, every asset is depreciated apart from the land.
ques: Now for ex: if a person brought the machinery of rupees 1,00,000 and depreciation rate 10% as per the straight-line method and he uses his machinery for 5 years. and after 5 years he sold machinery 
1. of 60,000
2. of 35,000
ANSWER:
Machinery Account: entries with steps:
1. he brought the machinery of 100,000
 Machinery A/C dr.     100000
     To cash A/C                         100000
2. Depreciation A/c dr.   50000
        To machinery acc            50000
(being machinery is depreciated 100000*10% = 10,000 for 1 year and for 5 year 50,000)
3. a) if machinery is sold 60000
then 
cash acc dr     60000
      TO sale of Machinery    50000
       to gain on machinery     10000
(being the cost of machinery 100000 - 50000(depreciation amount) = 50000 and machinery sold at 60000 i.e. 10000 profit.

and case b)
cash acc dr                   35000
loss on machinery dr    15000
       to sale on machinery     50000
(being machinery balance cost of 50000, sold at 35000 loss booked 15000)

Now, make a machinery account and put the above entries into machinery and depreciation accounts.

Note: I am making journal entries to show the easy way and clear way so that you can understand from basics how machinery account is made through journal entries.
Thankyou

 

  • 1
Please find this answer

  • 0
What are you looking for?