The following details pertains to purchase of a new office equipment ________.
(i) Basic price of the machine Rs. $1, 70, 000$
(ii) Customs duty Rs. $20, 000$
(iii) Sea freight Rs. $20, 000$
(iv) Insurance Rs. $5, 000$
(v) Erection charges Rs. $5, 000$
(vi) Trade discount Rs. $20, 000$
What is the historical cost of the office equipment.

Rs.

2, 00, 000

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Rs.

1, 75, 000

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Rs.

1, 50, 000

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Rs.

1, 90, 000

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Solution

The correct option is B Rs. $2, 00, 000$
Historical cost of any asset is the cost on which the asset is ready to put on use. In a given situation:

Basic Price of the machine: Rs.170000
Less: Trade Discount: Rs.20000
------------------
Net Purchase Price: Rs.150000
Add:
Customs Duty Rs.20000
Sea Fright Rs.20000
Insurance Rs.5000
Erection Charges Rs.5000
-------------------
Historical Cost Rs.200000.
-------------------

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Similar questions

Q. From the following details calculate the capital expenditure to be capitalized.
(i) Basic price of the Machine Rs.

1, 65, 000

(ii) Excise duty Rs.

25, 000

(iii) Freight Rs.

25, 000

(iv) Insurance Rs.

5, 000

(v) Erection charges Rs.

5, 000

(vi) Rebate Rs.

25, 000

Prove that the accounting equation is satisfied in all the following transactions of Sudhir.
(i) Started business with cash Rs. 1,00,000 and goods Rs. 40,000.
(ii) Bought goods on cash Rs. 30,000 and on credit for Rs. 20,000
(iii) Goods costing Rs. 48,000 sold at a profit of $33 \frac{1}{3}$ to Pranav. Half the payment received in cash.
(iv) Purchased furniture for office use Rs. 12,000 and for household use Rs. 8,000.
(v) Received cash from Pranav (customer) Rs. 25,500 and allowed him a discount Rs. 500.
(vi) Creditors of Rs. 5,000 accepted Rs. 4,000 and allowed a discount of Rs. 1,000.

Calculate the gross profit /loss if:

Sales Rs. 60,000; Cost of sales Rs. 50,000; Opening stock Rs. 10,000; Purchases Rs.40,000; Wages Rs. 20,000 and Office rent Rs. 10,000.

Vinod has the following transactions.Show accounting equation for the same:

(i) Commenced business with Cash Rs.50,000; and Stock Rs.30,000 and Machinery Rs.20,000.

(ii) Goods purchases on credit Rs.10,000.

(iii) Rent Received Rs.5,000.

(iv) Sold goods costing Rs.9,000 for Cash Rs.12,000.

Bobby opened a consulting firm and completed these transactions during November, 2005:

(a)	Invested Rs 4,00,000 cash and office equipment with Rs 1,50,000 in a business called Bobbie Consulting.
(b)	Purchased land and a small office building. The land was worth Rs 1,50,000 and the building worth Rs 3,50,000. The purchase price was paid with Rs 2,00,000 cash and a long term note payable for Rs 8,00,000.
(c)	Purchased office supplies on credit for Rs 12,000.
(d)	Bobbie transferred title of motor car to the business. The motor car was worth Rs 90,000.
(e)	Purchased for Rs 30,000 additional office equipment on credit.
(f)	Paid Rs 75,00 salary to the office manager.
(g)	Provided services to a client and collected Rs 30,000
(h)	Paid Rs 4,000 for the month’s utilities.
(i)	Paid supplier created in transaction (c).
(j)	Purchase new office equipment by paying Rs 93,000 cash and trading in old equipment with a recorded cost of Rs 7,000.
(k)	Completed services of a client for Rs 26,000. This amount is to be paid within 30 days.
(l)	Received Rs 19,000 payment from the client created in transaction (k).
(m)	Bobby withdrew Rs 20,000 from the business.

Analyse the above stated transactions and open the following T-accounts:

Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense.

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