Determine the cost of inventory of M/s XYZ International Limited involved in the import and trading of mobile phones as at March 31, 2011 in accordance with Accounting Standard – 2, Valuation of Inventories, from the following data (5000 phones) :-
Purchase cost of phones – Rs 50,000
Custom duty on Import – Rs 30,000
Port clearing charges – Rs 10,000
Carriage inwards – Rs 15,000
Salary to the Admin Staff in office – Rs 5,000
Selling and Marketing expenses – Rs 10,000
Salary to the sales staff – Rs 2,000
Out of the above purchase, 2000 phones have been sold and remaining phones are in stock. The net realisable value of the remaining phones as at March 31, 2011 is Rs 1.20 lacs
a) Determine the depreciation cost of the following Machinery for the year 2011 in accordance with AS -6
Cost of the Machine – Rs 100,000
Depreciation rate as per Schedule XIV of the Companies Act – 10.34% SLM Estimated life of the machine – 5 years.
b) Assuming the data given above remains the same, in the year 2013 the Company revises the estimated of the remaining useful life as on that date to be another 5 years, what will be accounting treatment c) Assuming the data given in ‘a’ above, if the schedule XIV depreciation is 25% what will be the depreciation charge.
In computing the above questions, you will understand what sir meant when he said that questions can be asked from any of the lines mentioned in the handout distributed in the class. AS 3
a) Depreciation rate as per life – 20%
Depreciation as per Schedule XIV – 10.34%
Hence, depreciation – 20% (Higher of the two)
b) Depreciated value of machine as on December 31, 2013 – Rs 60,000 (without charging depreciation for the current year) The estimated life is changed to 2018, hence the depreciation rate now becomes – 12.5% (estimated life 8 years) with the...