Advertisements
Advertisements
Question
Raj & Co purchased a machine on 1st January 2014 for ₹ 90,000. On 1st July 2014, they purchased another machine for ₹ 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for ₹ 40,000. It was decided that the machine be depreciated at 10% per annum on the diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.
Advertisements
Solution
| Date | Particulars | 1st Machinery ₹ | 2nd Machinery ₹ |
| 1.1.2014 | Cost price - 1 | 90,000 | |
| 1.7.2014 | Cost price - 2 | 60,000 | |
| 31.12.2015 | (-) Depreciation at 10% | 9,000 | 3,000 |
| 81,000 | 57,000 | ||
| 1.1.2015 | (-) Selling price | 40,000 | |
| Loss on Sales | 41,000 | ||
| 31.12.2015 | (-) Depreciation - 2 | 5,700 | |
| Balance in machinery A/c | 51,300 |
Machinery Account
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
| 1.1.2014 | To Bank A/c | 90,000 | 31.12.2014 | By Depreciation A/c (9000 + 3000) | 12,000 | ||
| 01.07.2014 | To Bank A/c | 60,000 | 31.12.2014 | By Balance c/d | 1,38,000 | ||
| 1,50,000 | 1,50,000 | ||||||
| 1.1.2015 | To Balance b/d | 1,38,000 | 1.1.2015 | By Bank A/c | 40,000 | ||
| By Profit and loss A/c | 41,000 | ||||||
| 31.12.2015 | By Depreciaton A/c | 5,700 | |||||
| 31.12.2015 | By Bank c/d | 51,300 | |||||
| 1,38,000 | 1,38,000 | ||||||
| 1.1.2016 | To Balance c/d | 51,300 | |||||
APPEARS IN
RELATED QUESTIONS
Do you agree or disagree with the following statement:
Under written down value method the Depreciation curve slopes parallel to 'X' axis.
What is sinking fund method?
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.
If the cost of the Computer is ₹ 40,000 and depreciation is to be charged at 8% p.a. Calculate the amount of depreciation.
M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1st 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 Written Down Value Method, on 31st March every year.
Prepare Printing Machine Account for the first four years.
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.
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.
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 charges of 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.
A firm buys a machine that wears out faster in early years but provides greater efficiency initially. Which depreciation method would most accurately reflect this pattern?
A company uses a method that results in high depreciation expense initially and lower in later years. This pattern benefits them because:
