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Accounts homework help~


Thotcahontas

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So...the depreciation for plant and machinery goes into the manufacturing account but do the repairs for plant & machinery go into the TP&L account or also the manu account... Plant and machinery are considered fixed assets right? So why are we putting anything pertaining to it in the manu account? Why not everything in the TP&L account?...

 

this is my first time coming across plant and machinery..this is difficult :rlytearpls:

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depreciation of plant & machinery ends up being part of the cost of the item the plant manufactures (that is why it goes to your "manufacturing account", not to P&L as an expense).  cost of item manufactured = raw materials + labor + overhead (e.g. utilities, depreciation, certain repairs and maintenance costs).  it only goes to P/L when the item is sold and is shown as "cost of goods sold"

 

repairs and maintenance of fixed assets is capitalized (charged to "manufacturing account") or expensed (to P/L) depending on the nature.  Something like is it a major repair or only for regular upkeep of the fixed asset - not sure about this you you need to check what the criteria is exactly.

 

At least that's what I remember from my cost accounting class.  I hope I steered you in the right direction.

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depreciation of plant & machinery ends up being part of the cost of the item the plant manufactures (that is why it goes to your "manufacturing account", not to P&L as an expense).  cost of item manufactured = raw materials + labor + overhead (e.g. utilities, depreciation, certain repairs and maintenance costs).  it only goes to P/L when the item is sold and is shown as "cost of goods sold"

 

repairs and maintenance of fixed assets is capitalized (charged to "manufacturing account") or expensed (to P/L) depending on the nature.  Something like is it a major repair or only for regular upkeep of the fixed asset - not sure about this you you need to check what the criteria is exactly.

 

At least that's what I remember from my cost accounting class.  I hope I steered you in the right direction.

yEAH you did but there was also provision for depre on the plant and machinery that goes into the P/L right? as an expense?

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yEAH you did but there was also provision for depre on the plant and machinery that goes into the P/L right? as an expense?

i'm not so sure about this...but i think if the fixed asset is related to manufacturing process, the depreciation on that fixed asset is always charged to the "manufacturing account" 

 

if it is not related to the manufacturing process (for example depreciation for the company's office building, as opposed to a manufacturing plant building), the depreciation is charged to P/L

 

 

i googled a little since i got confused by your last question and found this. it might be helpful for you

 

http://simplestudies.com/manufacturing-nonmanufacturing-costs.html#Introduction-To-Manufacturing-And-Nonmanufacturing-Costs

 

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