Business, 17.02.2021 08:50 zay179

Assume that Ganesh Trading Company (GTC) purchased machinery for office use on 1st January 2013 of Rs. 1,00,000. The machinery has an estimated life of 5 years and an estimated
residual value of Rs. 10,000. The GTC is in a dilemma whether to consider straight line method
or unit-of-production method in depreciating the machinery. Since the company is beginning a
new product process, the machinery will be used to produce 5,000 units in 2013 but product in
subsequent years will increase 5,000 units each year.
Required:
i. Calculate the depreciation expenses, the accumulated depreciation and the book value of the
machinery under both methods for each of the live years of the asset's life.
ü. Suggest which method is appropriate for Ganesh Trading Company.
Ans: (i) Rs 18,000 and Rs 1.20 per unit (Unit or activity method)

Answers: 1

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Assume that Ganesh Trading Company (GTC) purchased machinery for office use on 1st January 2013 of...