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The journal for wages paid for erection of machinery 5000 rupees 1. Machinery account dr. 5000 To wages account. 5000 2. Wages account dr. 5000 To cash account. 5000 Or Machinery account dr 5000 Cash account. 5000 Which of the set should be recorded the first set of journal or directly the second set


lithish kumar

lithish kumar

CA Inter

2K+

13-Jun-20

59

Answers (5)

It's the second one Machinery a/c. Dr To cash a/c


Akshita  Prava

Akshita Prava

CA Foundation

35

13-Jun-20

But, is first one not correct


Thread Starter

lithish kumar

lithish kumar

CA Inter

2K+

13-Jun-20

Thread Starter

lithish kumar

But, is first one not correct

Of wages or any other expense is done while the errection it is in considered the cost of machinery and not seperately e.g if price of mac hinery is 2000 and wages for errection are 100 the machinery will be of 2100 also further accounting such as depteciation is calculated on 2100


Nandini S

Nandini S

CA Foundation

1K+

14-Jun-20

Thread Starter

lithish kumar

But, is first one not correct

No u can't do that because Wages is an expense which occurred to bring machinery into use. It cannot be treated separately from the machinery just like in depriciation where we calculate the cost of the asset.


Akshita  Prava

Akshita Prava

CA Foundation

35

14-Jun-20

All expenses incurred for installation of the capital asset and necessary for it to be put to use have to be capitalised, hence wages paid for erection have to be debited to the Machinery account


sudha reddy

sudha reddy

Moderator

15-Jun-20

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