help needed

 

17. (a) The Alpha Electricity Company Limited decided to replace one of its old plants with
a modern one with a larger capacity. The plant when installed in 1960 cost the
company Rs. 30 lakhs, the components of materials, labour and overheads being in
the ratio of 3 : 2 : 1. It is ascertained that the costs of materials and labour have
gone up by 25% and 50% respectively. The proportion of overheads to total costs is
expected to remain the same as before.
The cost of the new plant as per improved design is Rs. 75 lakhs and in addition,
material recovered from the old plant of a value of Rs. 3,60,000 has been used in
the construction of the new plant. The old plant was scrapped and sold for Rs.
9,00,000.
The Accounts of the company are maintained under Double Account system.
Indicate how much would be capitalised and the amount that would be charged to
revenue. Show the Ledger Accounts.
Replies (7)

Overheads (1/4 of above or 1/5 of total) 8,43,750

hiee all any one plzz tell me the calculation of overhead in this question plzz tell 

 

in question specify that  

 

overhead are same as before then why we take 1/4 or 1/5 plzz tell

 

We have purchased for Rs.200000/- from outside state and returned the goods for Rs.100000/- , raised debit note .

For which amount should i issue the "C" form

do the needful

venkat

Estimated replacement cost of old works :

1. Materials (30,00,000*3/6 + 25%)         1875000

Labour (30,00,000*2/6 + 50%)             15,00000

Total material + labour                            33,75,000

Given material and labour have same proportion to total cost as before i.e it is 5/6 of total cost

Therefore  overheads will be 1/6 of total cost i.e. 33,75,000/5 * 1 = Rs. 6,75,000

therefore total estimated cost of replacement is = 33,75,000 + 6,75,000 40,50,000

2. cash cost of new plant Rs. 75,00,000

3. Entries :

Plant A/c Dr. (B.F.)                34,50,000                    

Replacement A/c Dr.           40,50,000

 To Bank A/c                                                    75,00,000

 

Plant A/c Dr.                                3,60,000

Bank A/c dr.                                 9,00,000

 To Repalcement A/c                                     12,60,000

 

Revenue A/c Dr.                           27,90,000

 To Replacement A/c                                       27,90,000                                   

In electricity companies following double a/c system, new asset is not recognised to the extent of replacement cost of old works hence that much portion is written off to revenue A/c (Pl. check the calculation part as i did it verbally)

Regards, CA Shakuntala Chhangani

thankzzz sir........

My dear, its not sir. Kindly use mam.

oh my mistake so sorry .............

 

thankzz mam ..............

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