Kohinoor Enterprises bought three different machines on 1 January in year 1 (its accounting year is from Jan 1- Dec 31). The purchase price of all three machines was equal. The company spent 20XXX0 on installation of each of its machine on the same day. Each machine has an estimated useful life of 5 years and is expected to have a residual value of $ 75,000 at the end of its useful life. The applied method of depreciation for specific machines is not clear because books of accounts are not maintained properly. However, Accountant has given this information that for each machine a different method of depreciation was used. Further, as per the applicable accounting standards the Kohinoor Enterprises cannot apply the production of unit based method of depreciation on any machinery. At the end of year 3 following details are available regarding each of the machines. Machine 1: The per year depreciation for first three years is 31,85,000 + {(XXX) * (2)}. Machine 2: The difference between annual depreciation of year 1 and year 2 is non-zero and is equal to the difference between annual depreciation of year 3 and year 2. Machine 3: The difference between annual depreciation of year 1 and year 2 is higher than the difference between annual depreciation of year 3 and year 2. Q31 Which method of depreciation is applied for machine 1? Q32 Which method of depreciation is applied for machine 2? Q33 Which method of depreciation is applied for machine 3? Q34 At what value each of the above machines would be initially recorded (January 1, year 1) in the books of accounts? Q35 In case of machine 1, what will be the amount of Net block/ Net value at the end of year 3? Q36 In case of machine 2, what will be the amount of accumulated depreciation at the end of year 3? Q37 In case of machine 3, what is the annual rate of depreciation? (Answer should be in percentage and rounded off to whole number. For example- if your calculated answer is 24.973% then the final answer should be 25%). Q38 Suppose in case of machine 2, at the end of year 3 an impairment test happened. If Net Selling Price (fair value less cost to sell) is 1,50,000 and value in use is 31,70,000, what will be the amount of impairment loss? Q39 In addition to Q38, if revaluation reserve (surplus) with respect to machinery 2 is available under other equity is Rs. 31,60,000, then after impairment what would be the remaining balance of revaluation reserve (surplus) with respect to machinery 2 under other equity? Q40 In addition to Q38, if revaluation reserve (surplus) with respect to machinery 2 is available under other equity is $30,000, then after impairment what would be the remaining balance of revaluation reserve (surplus) with respect to machinery 1 under other equity? Q41 If the sale proceeds received on disposing off the machine 1 at the end of the year 3 is $3,20,000 what will be the amount of profit/loss on disposal? Q42 Comment on the depreciation method adopted by Kohinoor Enterprises for each of its machine assuming that they belong to an industry which demands frequent change in their production technology Kohinoor Enterprises bought three different machines on 1 January in year 1 (its accounting year is from Jan 1- Dec 31). The purchase price of all three machines was equal. The company spent 20XXX0 on installation of each of its machine on the same day. Each machine has an estimated useful life of 5 years and is expected to have a residual value of $ 75,000 at the end of its useful life. The applied method of depreciation for specific machines is not clear because books of accounts are not maintained properly. However, Accountant has given this information that for each machine a different method of depreciation was used. Further, as per the applicable accounting standards the Kohinoor Enterprises cannot apply the production of unit based method of depreciation on any machinery. At the end of year 3 following details are available regarding each of the machines. Machine 1: The per year depreciation for first three years is 31,85,000 + {(XXX) * (2)}. Machine 2: The difference between annual depreciation of year 1 and year 2 is non-zero and is equal to the difference between annual depreciation of year 3 and year 2. Machine 3: The difference between annual depreciation of year 1 and year 2 is higher than the difference between annual depreciation of year 3 and year 2. Q31 Which method of depreciation is applied for machine 1? Q32 Which method of depreciation is applied for machine 2? Q33 Which method of depreciation is applied for machine 3? Q34 At what value each of the above machines would be initially recorded (January 1, year 1) in the books of accounts? Q35 In case of machine 1, what will be the amount of Net block/ Net value at the end of year 3? Q36 In case of machine 2, what will be the amount of accumulated depreciation at the end of year 3? Q37 In case of machine 3, what is the annual rate of depreciation? (Answer should be in percentage and rounded off to whole number. For example- if your calculated answer is 24.973% then the final answer should be 25%). Q38 Suppose in case of machine 2, at the end of year 3 an impairment test happened. If Net Selling Price (fair value less cost to sell) is 1,50,000 and value in use is 31,70,000, what will be the amount of impairment loss? Q39 In addition to Q38, if revaluation reserve (surplus) with respect to machinery 2 is available under other equity is Rs. 31,60,000, then after impairment what would be the remaining balance of revaluation reserve (surplus) with respect to machinery 2 under other equity? Q40 In addition to Q38, if revaluation reserve (surplus) with respect to machinery 2 is available under other equity is $30,000, then after impairment what would be the remaining balance of revaluation reserve (surplus) with respect to machinery 1 under other equity? Q41 If the sale proceeds received on disposing off the machine 1 at the end of the year 3 is $3,20,000 what will be the amount of profit/loss on disposal? Q42 Comment on the depreciation method adopted by Kohinoor Enterprises for each of its machine assuming that they belong to an industry which demands frequent change in their production technology