Advertisements
Advertisements
Question
A firm acquired a machine on 1st April 2015 at a cost of ₹ 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.
Advertisements
Solution
| Date | Particulars | ₹ |
| 01.04.2015 | Machinery purchased | 50,000 |
| 31.12.2015 | Less: Depreciation @ 30% | 11,250 |
| 01.01.2016 | Book value | 38,750 |
| 31.12.2016 | Less: Depreciation @ 30% | 11,625 |
| 01.01.2017 | Book value | 27.125 |
| 31.12.2017 | Less: Depreciation @ 30% | 8,138 |
| 01.01.2018 | Book value | 18,987 |
Machinery A/c
| Dr. | Cr. | ||||||
| Date | Particulars | L.F. | ₹ | Date | Particulars | L.F. | ₹ |
| 01.04.15 | To Bank A/c | 50,000 | 31.12.15 | By Depreciation A/c | 11,250 | ||
| 31.12.15 | By Balance c/d | 38,750 | |||||
| 50,000 | 50,000 | ||||||
| 01.01.16 | To Balance b/d | 38,750 | 31.12.16 | By Depreciation A/c | 11,625 | ||
| 31.12.16 | By Balance c/d | 27,125 | |||||
| 38,750 | 38,750 | ||||||
| 01.01.17 | To Balance b/d | 27,125 | 31.12.17 | By Depreciation A/c | 8,138 | ||
| 31.12.17 | By Balance c/d | 18,987 | |||||
| 27,125 | 27,125 | ||||||
| 01.01.18 | To Balance b/d | 18,987 | |||||
Depreciation A/c
| Dr. | Cr. | ||||||
| Date | Particulars | L.F. | ₹ | Date | Particulars | L.F. | ₹ |
| 31.12.15 | To Machinery A/c | 11,250 | 31.12.15 | By P & L A/c | 11,250 | ||
| 11,250 | 11,250 | ||||||
| 31.12.16 | To Machinery A/c | 11,625 | 31.12.16 | By P & L A/c | 11,625 | ||
| 11,625 | 11,625 | ||||||
| 31.12.17 | To Machinery A/c | 8,138 | 31.12.17 | By P & L A/c | 8,138 | ||
| 8,138 | 8,138 | ||||||
APPEARS IN
RELATED QUESTIONS
State whether the following statement is True or False with reasons:
Depreciation is charged on fixed assets.
State whether the following statement is True or False with reasons:
Depreciation increases the value of the asset.
A depreciable asset may suffer obsolescence due to ______.
Machinery was purchased on 1st January 2015 for ₹ 4,00,000. ₹ 15,000 was spent on its erection and ₹ 10,000 on its freight charges. Depreciation is charged at 10% per annum on the straight-line method. The books are closed on 31st March each year. Calculate the amount of depreciation on machinery for the first two years.
A manufacturing company purchased on 1st April 2010, a plant and machinery for ₹ 4,50,000 and spent ₹ 50,000 on its installation. After having used it for three years, it was sold for ₹ 3,85,000. Depreciation is to be provided every year at the rate of 15% per annum on the fixed installment method. Accounts are closed on 31st March every year. Calculate profit or loss on sale of machinery.
On 1st October 2014, a truck was purchased for ₹ 8,00,000 by Laxmi Transports Ltd. Depreciation was provided @ 15% p.a. under diminishing balance method. On 31st March 2017, the above truck was sold for ₹ 5,00,000. Accounts are closed on 31st March every year. Find out the profit or loss made on the sale of the truck.
On 1st January 2017 ‘Sai Industries, Nagpur’ purchased a Machine costing ₹ 1,65,000 and spent ₹ 15,000 for its installation charges. The estimated life of the Machine is to be 10 years and the scrap value at the end of its life would be ₹ 30,000. On 1st October 2018, the entire Machine was sold for ₹ 1,50,000.
Show Machinery Account, Depreciation Account, for the years 2016-17, 2017-18, and 2018-19 assuming that the accounts are closed on 31st March every year.
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.
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.
M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1 Oct 2015 and spent ₹ 5,000 on its transport and installation. Another Machine for ₹ 45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on the Written Down Value Method, on 31st March every year.
Prepare Printing Machine Account for the first four years.
