Hello, I have an question here. Can anyone help me?
My question is:

CMY Berhad started its business on July 1 2005 and the same day purchased machinery for RM24000. CMY Berhad decided that its financial year would end on 31 December each year and rate of depreciation is 20% per annum. On 1 October 2006, CMY Berhad purchased additional machinery for RM6000 and decide to depreciation it the same way as the old machine. It should be noted that depreciation on the machinery is to the manufacturing account.

Required:

For the year 2005,2006 and 2007, prepare the accounts for:
a) Machinery

b) Depreciation showing for each year the transfer entries to the final account


Thanks :),
Ida.L

The depreciation for one year is 20% of purchase price. If the equipment was purchased on July1, then the amoun is half of one year. For the Oct purchase the amount will be 1/4 of the full 20%.

The depreciation expense account will be debited for the amount of depreciation for each year. The accumulated depreciaton account will be credit for the same amount. The accum dep account is a contra account to machinery. This account will show what the BOOK value is of the machinery. Hope this helps

The debit is not to depreciation expense. It's a manufacturer and it says it's charge to the manufacturing account. This would be an overhead cost to a manufacturer, not an administrative expense.