Answer Posted / just venkey.....
fictitious asset
Definition
Asset created by an accounting entry (and included under
assets in the balance sheet) that has no tangible existence
or realizable value but represents actual cash expenditure.
The purpose of creating a fictitious asset is to account
for expenses (such as those incurred in starting a
business) that cannot be placed under any normal account
heading. Fictitious assets are written off as soon as
possible against the firm's earnings.
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Raj & Raj Ltd purchased a machinery on 01.01.1996 for Rs.88,000.The life of the machine estimated to be 5 Yrs.It was calculated that the old machinery would fetch Rs.8000 at the end of its useful life.it was decided to replace the machinery at the end of the 5th year by setting up depreciation fund and invest the annual depreciation (along with interest earned each year) in gilt edged securities carrying interest at 5% p.a. At the end of the 5th Year the securities were sold for Rs.9000.As per the sinking fund table Rs.14,478 is to be invested every year.A new machine was purchased on 01.01.2001 for Rs.1,00,000.pass the journal entries and show the ledger accounts
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