Mineral Water Company purchased a new Y-Brand RO Plant on 01 January 2016. The following information refers to the purchase and installation of this equipment: 1. The list price of is Rs.5,000,000.
2. Freight Charges of Rs.125,000
3. Paid sales taxes of Rs.95,000 on the plant on the date of purchase.
4. Installation and other set-up costs amounted to Rs.250,000.
5. During installation, one of the pieces of plant was accidentally damaged by an employee. It cost the club Rs.100,000 to repair this damage.
6. As soon as the plant was installed, the club paid Rs.10,500 to print brochures featuring the plant.
7. During the first year expenditures for ordinary repairs, maintenance, electricity, and other items necessary for use of exercise equipment was also paid amounting to Rs.225,000.

Instruction:
a) Determine the cost of the Y-Brand RO Plant that is the basis for calculating annual depreciation on the equipment.

b) Fresh Mineral Water Company uses straight-line depreciation on all of its depreciable assets. The Y-Brand RO Plant’s useful life is estimated to be 10 years with a residual value of Rs.500,000. Depreciation for partial year is recorded to the nearest full month. (Hint: Cost of the Y-Brand RO Plant to be taken as determined in Part-a.) Prepare journal entry to record depreciation expense for the year ended on December 31, 2016.

c) On October 01, 2018, Fresh Mineral Water Company traded-in used Y-Brand RO Plant (this plant had been acquired on 01 January 2016) for a new Z-Brand RO Plant. The cost of Z-Brand RO Plant is Rs.7,500,000. Fresh Mineral Water Company was given a trade-in allowance of Rs.3,000,000, the remaining cost of the Z-Brand RO Plant is paid in cash. (Hint: Ascertain the amount of Accumulated Depreciation on Y-Brand RO Plant till the date of trade-in. One year depreciation has been calculated in Part-b.)
i. Calculate the gain or loss on disposal of Y-Brand RO Plant.
ii. Prepare journal entry to record the above transaction