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प्रश्न
On 1st April 2015, Suman Traders purchased Machinery for ₹ 30,000. On 1st Oct. 2015, they purchased further Machinery costing ₹ 20,000.
On 1st Oct. 2016, they sold the Machine purchased on 1st April 2015 for ₹ 18,000 and brought another Machine for ₹ 15,000 on the same date.
Depreciation is provided on Machinery @ 20% p.a. on the Diminishing Balance Method and the financial year closes on 31st March every year.
Prepare the Machinery Account and Depreciation Account for the year 2015-16, 2016-17, and 2017-18.
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उत्तर
In the books of Suman Traders
| Dr. | Machinery Account | Cr. | |||||
| Date | Particulars | J.F. | Amt ₹ | Date | Particulars | J.F. | Amt ₹ |
| 2015 | 2016 | ||||||
| Apr. 1 | To Cash/Bank A/c | 30,000 | Mar. 31 | By Depreciation A/c (6,000 + 2,000) | 8,000 | ||
| Oct. 1 | To Cash/Bank A/c | 20,000 | Mar. 31 | By Balance c/d | 42,000 | ||
| 50,000 | 50,000 | ||||||
| 2016 | 2016 | ||||||
| Apr. 1 | To Balance b/d | 42,000 | Oct. 1 | By Cash/Bank A/c | 18,000 | ||
| Oct. 1 | To Cash/Bank A/c | 15,000 | Oct. 1 | By Depreciation A/c | 2,400 | ||
| Oct. 1 | By Profit and loss A/c (Loss on sale) | 3,600 | |||||
| 2017 | |||||||
| Mar. 31 | By Depreciation A/c | 5,100 | |||||
| Mar. 31 | By Balance c/d | 27,900 | |||||
| 57,000 | 57,000 | ||||||
| 2017 | 2018 | ||||||
| Apr. 1 | To Balance b/d | 27,900 | Mar. 31 | By Depreciation A/c | 5,580 | ||
| Mar. 31 | By Balance c/d | 22,320 | |||||
| 27,900 | 27,900 | ||||||
| 2018 | |||||||
| Apr. 1 | To Balance b/d | 22,320 | |||||
| Dr. | Depreciation Account | Cr. | |||||
| Date | Particular | J.F. | Amt ₹ | Date | Particular | J.F. | Amt ₹ |
| 2016 | 2016 | ||||||
| Mar. 31 | To Machinery A/c | 8,000 | Mar. 31 | By Profit and Loss A/c | 8,000 | ||
| 8,000 | 8,000 | ||||||
| 2016 | 2017 | ||||||
| Oct. 1 | To Machinery A/c | 2,400 | Mar. 31 | By Profit and Loss A/c | 7,500 | ||
| 2017 | |||||||
| Mar. 31 | To Machinery A/c | 5,100 | |||||
| 7,500 | 7,500 | ||||||
| 2018 | 2018 | ||||||
| Mar. 31 | To Machinery A/c | 5,580 | Mar. 31 | By Profit and Loss A/c | 5,580 | ||
| 5,580 | 5,580 | ||||||
Working Notes:
1. Calculation of Profit or loss on sale of machine:
Original cost on 01.04.2015 = ₹ 30,000
Less: Depreciation for 2015-16 (12 months) = ₹ 6,000
W.D.V. on 01.04.2016 = ₹ 24,000
Less: Depreciation for 2016-17 (6 months) = ₹ 2,400
W.D.V. on date of sale = ₹ 21,600
Less: Selling price = ₹ 18,000
∴ Loss on sale of machine = ₹ 3,600
2. Calculation of Depreciation for 2016-17:
(a) Opening balance on 01.04.2016 = ₹ 42,000
Less: W.D.V. of machine sold on 01.04.2016 = ₹ 24,000
18,000 – 20% = ₹ 3,600
(b) Purchase of machine on 01.10.2016 – 15,000 – 20% – 6months = 3,600 + 1,500 = ₹ 5,100
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संबंधित प्रश्न
Answer in One Sentence only:
Why depreciation is charged even in the year of loss?
Write the word/term/phrase which can substitute the following statement:
Expenses incurred for fixation of the new asset to bring it in working condition.
Write the word/term/phrase which can substitute the following statement:
Excess of Selling price of fixed asset over its Written Down Value.
Select the most appropriate answer from the alternatives given below and rewrite the sentence:
The amount of depreciation reduces year after year under ______
State whether the following statement is True or False with reasons:
Depreciation increases the value of the asset.
Complete the following sentence:
In Fixed Instalment System the amount of depreciation is ______ every year.
Under straight-line method, the amount of depreciation is ______.
If the total charge of depreciation and maintenance cost are considered, the method that provides a uniform charge is ______.
For which of the following assets, the depletion method is adopted for writing off cost of the asset?
State the advantages of straight-line method of depreciation.
State the advantages of written down value method of depreciation.
A company purchased a building for ₹ 50,000. The useful life of the building is 10 years and the residual value is ₹ 5,000. Find out the amount and rate of depreciation under the straight-line method.
An asset is purchased on 1.1.2016 for ₹ 50,000. Depreciation is to be provided annually according to the straight-line method. The useful life of the asset is 10 years and its residual value is ₹ 10,000. Accounts are closed on 31st December every year. You are required to find out the rate of depreciation and give journal entries for first two years.
From the following particulars, give journal entries for 2 years and prepare machinery account under straight-line method of providing depreciation:
Machinery was purchased on 1.1.2016
Price of the machine ₹ 36,000
Freight charges ₹ 2,500
Installation charges ₹ 1,500
Life of the machine 5 years
An asset is purchased for ₹ 50,000. The rate of depreciation is 15% p.a. Calculate the annual depreciation for the first two years under the diminishing balance method.
A machine costing ₹ 23,000 is estimated to have a life of 7 years and the scrap value is estimated at ₹ 2,000 at the end of its useful life. Find out the amount of depreciation p.a.
Mr. ‘X’ purchased Furniture on 1st October 2015 at ₹ 2,80,000 and spent ₹ 20,000 on its installation. He provides depreciation at 6% under the straight-line method on 31st March 2016. Calculate the amount of depreciation.
M/s Sitaram and Co Purchased a Machinery on 1st January 2016 for ₹ 2,00,000. The company provides depreciation @ 10% p.a. on Reducing Balance Method on 31st March every year. Calculate Written Down Value of Machinery as of 31st March 2017.
On 1st April 2015, Farid of Nasik purchased a Motor Car for ₹ 55,000. The scrap value of the Motor Car was estimated at ₹ 10,000 and its estimated life is 10 years. The Registration charge for the Motor Car was ₹ 5,000.
Show Motor Car Account for first four years, assuming that the books of accounts are closed on 31st March every year.
Shubhangi Trading Company of Dombivli purchased Machinery for ₹ 86,000 on 1st January 2016 and immediately spent ₹ 4,000 on its fixation and erection. On 1st October 2016 additional Machinery costing ₹ 40,000 was purchased.
On 1st October 2017, the Machinery purchased on 1st January 2016 became obsolete and was sold for ₹ 70,000. On 1st July 2017, a new Machine was also purchased for ₹ 45,000.
Depreciation was provided annually on 31st March at the rate of 12% per annum on the fixed installment method.
Prepare Machinery Account for three years and pass Journal Entries for the Third year i.e. 2017-2018.
Samarth Manufacturing Co. Ltd, Aurangabad, purchased a New Machinery for ₹ 45,000 on 1st Jan 2015 and immediately spent ₹ 5,000 on its fixation and erection. In the same year, 1st July additional Machinery costing ₹ 25,000 was purchased. On 1st July 2016, the Machinery purchased on 1st Jan 2015 became obsolete and was sold for ₹ 40,000.
Depreciation was provided annually on 31st March at the rate of 10% per annum on the Fixed Instalment Method.
You are required to prepare Machinery Account for the year 2014-15, 2015-16, 2016-17.
Vishal Company, Dhule, purchased Machinery costing ₹ 60,000 on 1st April 2016. They purchased further Machinery on 1st October 2017, costing ₹ 30,000, and on 1st July 2018, costing ₹ 20,000. On 1st Jan 2019, one-third of the Machinery, which was purchased on 1st April 2016, became obsolete and it was sold for ₹ 18,000.
Assume that, company account closes on 31st March every year.
Show Machinery Account for the first three(3) years and pass journal entries for the Third year, after charging depreciation at 10% p.a. on Written Down Value Method.
Radhika-Masale’ Amravati purchased a Plant on 1st Jan. 2015 for ₹ 80,000. A new Plant was also purchased
for ₹ 60,000, installation expenses being ₹ 10,000 on 1st April 2016. On 1st Jan 2017, a new Plant was purchased for ₹ 20,000, by disposing of the 1st Plant at ₹ 60,000.
Prepare Plant Account and Depreciation Account for 31st March 2015, 31st March 2016, and 31st March 2017, assuming that the rate of depreciation was @ 10% on Diminishing Balance Method.
Solution:
Which of the following methods charges an equal amount of depreciation every year?
In the Written Down Value Method, depreciation is calculated on the:
Under which method might two identical machines purchased at the same cost show different depreciation expenses in two companies?
A factory’s machine remains idle for several months due to maintenance breakdowns. Which method ensures that depreciation is not overcharged during these idle periods?
A company uses a method that results in high depreciation expense initially and lower in later years. This pattern benefits them because:
The Double Declining Balance Method applies depreciation:
