Stage of completion Formula

Stage of completion Formula

Stage of completion can be calculated by the following formula.

Stage of Completion =   Work Certified   .   

                                     Contract Price

Example

Work Certified = 25,000

Contract price = 40,000

What would be stage of completion?

Solution

Stage of Completion =   Work Certified   .   

                                     Contract Price

= (25,000/40,000)

=62.5% (Stage of completion)

Cost incurred Stage of completion Formula

Cost incurred Stage of completion Formula

Stage of completion can be calculated by the following formula.

Stage of Completion =   Cost incurred to Date   .   

                                    Total estimated Cost

Example

Cost incurred = 45,000

Total estimated Cost = 60,000

What would be stage of completion?

Solution

Stage of Completion =   Cost incurred to Date   .   

                                    Total estimated Cost

= (45,000/60,000)

=75% (Stage of completion)

Tax Paid Formula

Tax Paid Formula

Tax paid during the year can be calculated by the following formula.

Tax Paid = opening Tax payable + Tax levied during Year – Closing Tax payable

Example

Opening – Tax payable = 25,000

Closing – Tax Payable = 40,000

Tax Levied- Raw material= 50,000

How much tax paid during the year

Solution

Tax Paid = opening Tax payable + Tax levied during Year – Closing Tax payable

=25000+50,000-40,000

=35000 (Tax paid during the year)

Stock Consumed Formula

Stock Consumed Formula

Stock or raw material consumed can be calculated by the following formula.

Stock Consumed = opening stock + purchases – closing Stock

Example

Opening Stock – Raw material = 10,000

Closing Stock – Raw material = 5,000

Purchases- Raw material= 40,000

What would be stock consumed

Solution

Opening Stock – Raw material         = 10,000

Add: Purchases- Raw material=          40,000

Closing Stock – Raw material =          (8,000)

Raw material consumed                     42,000

Credit Purchases Formula

Credit Purchases Formula

Credit Purchases can be calculated by the following formula.

Credit Purchases= Closing Creditor Balance + Cash Paid – Opening Creditor Balance

Example

Creditor – Opening Balance =  30,000

Creditor – Closing Balance =   50,000

Cash Paid during Year=          80,000

Solution

Credit Sale= Closing Creditor Balance + Cash Paid – Opening Creditor Balance

= 40,000+80,000-40,000

=90,000 (Credit Purchases)

Credit Sales Formula

Credit Sales Formula

Credit Sales can be calculated by the following formula.

Credit Sale= Closing Debtor Balance + Cash received – Opening Debtor Balance

Example

Debtor – Opening Balance =  40,000

Debtor – Closing Balance =   50,000

Cash received during Year=   60,000

Solution

Credit Sale= Closing Debtor Balance + Cash received – Opening Debtor Balance

= 50,000+60,000-40,000

=70,000 (Credit Sales)

Stock Closing Balance Formula

Stock Closing Balance Formula

Stock or inventory closing balance can be calculated by the following formula.

Closing balance = Opening Stock + Purchases – Sales

Example

Opening Balance Inventory = 20,000

Purchases during the Period = 70,000

Sales made during the Period = 40,000

What would be Closing Balance?

Solution

Closing balance = Opening Stock + Purchases – Sales

=20,000+70,000-40,000

=50,000 (Closing Balance)

Trade Payable Closing Balance Formula

Trade Payable Closing Balance Formula

Trade payable closing balance can be calculated by the following formula.

Closing balance = Opening Balance + Credit Sales –Cash received

Example

Opening Balance of Trade payable = 20,000

Credit Purchases during the Period = 50,000

Cash Paid during the Period = 10,000

What would be Closing Balance?

Solution

Closing balance = Opening Balance + Credit Purchases – Cash Paid

=20,000+50,000-10,000

=60,000 (Closing Balance)

Trade Receivable Closing Balance Formula

Trade Receivable Closing Balance Formula

Trade receivable can be calculated by the following formula.

Closing balance = Opening Balance + Credit Sales –Cash received

Example

Opening = 10,000

Credit Sales = 30,000

Cash Received = 15,000

What would be Closing Balance?

Solution

Closing balance = Opening Balance + Credit Sales –Cash received

=10,000+30,000-15,000

=25,000 (Closing Balance)

Impairment Loss Formula

Impairment Loss Formula

Impairment loss is calculated by the following formula

Impairment Loss = Carrying Amount – Recoverable Amount

Example

Cost = 120,000

Accumulated Depreciation = 40,000

Recoverable Amount = 70,000

What is Impairment Loss?

Solution

Carrying amount = 120,000- 40,000

= 80,000 (Carrying amount)

Impairment Loss = Carrying Amount – Recoverable Amount

= 80,000-70,000

= 10,000 (impairment Loss)

Revaluation Surplus Formula

Revaluation Surplus Formula

Revaluation Surplus can be calculated by the following simple formula.

Revaluation Surplus = Revalued Amount – Net book Value

Example

Plant Cost = 100,000

Net book value = 80,000

Revalued amount= 120,000

What would be revaluation Surplus?

Solution

Revaluation Surplus = Revalued amount- net book value

=120,000-80,000

= 40,000 (revalued amount)

Sum of Digit Depreciation Formula

Sum of Digit Depreciation Formula

Sum of digit can be calculated by the following formula. Sum of digit used to calculate proportionate depreciation for each year.

Sum of Digit =n (n+1)/2

Example

Year = 6

100,000

Calculate Depreciation

Solution

Sum of Digit =n (n+1)/2

=6 (6+1)/2

=6 (7)/2

=42/2

=21

Depreciation

First year Depreciation = 6/21 x 100,000

2^nd year Depreciation =   5/21 x 100,000

3^rd year depreciation =    4/21x 100,000

4^th year Depreciation =    3/21x 100,000

5^th Year Depreciation=     2/21 x 100,000

6^th Year Depreciation =   1/21 x 100,000

Machine Hour Rate Depreciation Formula

Machine Hour Rate Depreciation Formula

In this method the useful life of the machine is divided by the total expected number of hour from machine.

Depreciation Rate = useful life/machine hours

Example

Cost            = 100,000

Residual value = 10,000

Machine hours = 8000

Depreciation Rate=

Solution

Depreciable amount = 100,000-10,000

=90,000

Depreciation Rate = 90,000/8000

= 11.25

Carrying Amount Formula

Carrying Amount Formula

Carrying amount of an asset can be calculated by deducting accumulated depreciation from the cost.

Carrying Amount = Cost –Accumulated Depreciation

Example

Plant machinery = 100,000

Depreciation = 10,000

What would be carrying amount after two years?

Solution

Plant Cost                                            100,000

Accumulated Depreciation                       (20,000)

Carrying Amount                                    80,000

Straight Line Depreciation Formula

Straight Line Depreciation Formula

Straight-line method depreciation is calculated by dividing depreciable amount with useful life.

Straight Line Depreciation = Depreciable Amount

                                                Useful life

Example

Cost =20,000

Residual value = 5000

Useful life= 3 Years

What would be Straight line Depreciation?

Solution

Depreciable Amount = cost – Residual Value

= 20,000-5,000

=15,000

Straight Line Depreciation = Depreciable Amount

                                                   Useful life

= 15,000/3

=5,000 (Straight Line Depreciation)

Straight line depreciation is regarded as simplest depreciation method.

Depreciable Amount Formula

Depreciable Amount Formula

Depreciable amount can be calculated by the following formula. Depreciation for the year is calculated on the bases of depreciable amount.

Depreciable Amount = Cost of Asset – Residual Value

Example

Cost = 120,000

Residual Value = 40,000

Calculate Depreciable Amount

Solution

Depreciable Amount = Cost of Asset – Residual Value

=120,000-40,000

=80,000. (Depreciable Amount)

Depreciable amount is play important role for calculating the depreciation