Your company gives a coffee machine to a client free of cost on the condition that all the materials needed for the coffee machine needs to be purchased from the company itself for 3 years. After 3 years the coffee machine becomes of the client.
What is the journal entries for the company giving the machine and the client?
1. Debit Coffee Machine Account (Cost)
2. Provide Deprciation @ 15% (1st and 2nd Year)
3. At the end of 3rd year write off fully the balance in Coffee Machine account debiting Deprciaion Account.
No entry in Client books for Coffee Machine.
Pass entry for regular purchase and sale of materials in both books.
1. Debit Coffee Machine Account (Cost)
2. Provide Deprciation @ 15% (1st and 2nd Year)
3. At the end of 3rd year write off fully the balance in Coffee Machine account debiting Deprciaion Account.
No entry in Client books for Coffee Machine.
Pass entry for regular purchase and sale of materials in both books.
In my opinion,
(1) debit coffee machine account (with cost)
credit Bank account.
(2) depreciation account ( with value of depreciation)
credit coffee machine account ( for 1 & II years depreciation respectively)
(3) Advertisement account debit (with balance amount)
depreciation account debit
to coffee machine account.
T R SOOD & CO
New Delhi
CA Inter
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Rahul Dang & Associates-Chartered Accountants
Pune
CA Inter
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