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How does the purchase of a new machine affect the profit and loss statement?

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Question ajoutée par Rana Alnajjar , Web developer , Lebcards
Date de publication: 2016/12/15
Mohammed Omar Khan
par Mohammed Omar Khan , Chief Financial Officer , Mr. Raut P.G

When a new machine is purchased, we have to determine the 2 aspects:-

 

1. Whether the life of the machine, if it has long life say more than 1 year.

2. The value of the machine.

 

In the 1st instance only the depreciated value of the machine is taken in P&L A/c.

If the life is less than a year than we have to taken the full value of the machine in P&L A/c.

 

In the 2nd instance if the machine value is less Eg:- Grinders cost is Aed. 500/- though may be valuable for 2 or more years, we can take  it in P&L A/c.

When a machinery is purchased there will be no effect on profit and loss statement. But if it is depreciated an entry will be written on debit side. 

abdullah meer
par abdullah meer , Senior Accountant , Ahbar Industries

the purchase of a machine will usually be considered as the purchase of a fixed asset.

the profit & loss account will be affected when the depreciation of the machine will be expesed.

manseer muhammed ali
par manseer muhammed ali , Accountant General , Royal Lighting L.L.C & Royal Furnishing LLC

The purchase of a new machine that will be used in a business will affect the profit and loss statement, or income statement, when the machine is placed into service. At that point, depreciation expense will begin and there will likely be other expenses such as wages, maintenance, electricity, and so on.

Wilfredo Quito
par Wilfredo Quito , Accounting Manager , DDC LAND INC.

 

Purchase of a new machine will affect the profit and loss statement because of the these two operating expenses such as Depreciation Expense and  Repairs & Maintenance expense

 

Abdullah Aziz Eldain Morsi  Elgendy -        CMA  Candidate
par Abdullah Aziz Eldain Morsi Elgendy - CMA Candidate , Regional Receivable Accountant , Amiantit Group of Companies

 it is  have direct effect , but the relevant cost and expense  like electricity and maintenance   , deprecation  which are so familiar to recorded in profit and loss statements  

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