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Question No 18 Chapter No 14 - T.S. Grewal 11 Class

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Question No 18 Chapter No 14

Written Down value Method
Without Goods and Services Tax (GST)
18. The original cost of furniture amounted to ₹ 4,000 and it is decided to write off 5% on the original cost as depreciation at the end of each year. Show the Ledger Account as it will appear during the first four years. Show also how the same account will appear if it was decided to write off 5% on the diminishing balance of the asset each year.

The solution of Question No 18 Chapter No 14: -

(Original Cost Method)

Date	Particulars	Amount	Date	Particulars	Amount
Dr.	Machine A/c				Cr.
I year			31/12/	By Deprecation A/c*1	200
01/01	To Bank A/c	4,000	31/12/	By Balance C/d	3,800
		4,000			4,000
II year
01/01	To Balance b/d	3,800	31/12/	By Deprecation A/c	200
			31/12/	By Balance C/d	3,600
		3,800			3,800
III year
01/01	To Balance b/d	3,600	31/012/	By Deprecation A/c	200
			31/12/	By Balance C/d	3,400
		3,600			3,600
IV year
01/01	To Balance b/d	3,400	31/12/	By Deprecation A/c	200
			31/12/	By Balance C/d	3,200
		3,400			3,400

(Diminishing Balance Method)

Date	Particulars	Amount	Date	Particulars	Amount
Dr.	Machine A/c				Cr.
I year			31/03/	By Deprecation A/c	200
01/01	To Bank A/c	4,000	31/03/	By Balance C/d	3,800
		4,000			4,000
II year
01/01	To Balance b/d	3,800	31/03/	By Deprecation A/c*2	190
			31/03/	By Balance C/d	3,610
		3,800			3,800
III year
01/01	To Balance b/d	3,610	31/03/	By Deprecation A/c	181
			31/03/	By Balance C/d	3,429
		3,610			3,610
IV year
01/01	To Balance b/d	3,429	31/03/	By Deprecation A/c	171
			31/03/	By Balance C/d	3,258
		3,429			3,429

Working note:-

*1:- Calculation of the amount of Depreciation on furniture for a year
Purchased on 1st July 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 4,000
Rate of Depreciation = 5%
Period = from 01/03/17 to 31/03/18 i.e.12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=4,000 X 5/100 X 6/12
Depreciation =200
Total Depreciation for the year =200

*2:- Calculation of the amount of Depreciation on furniture for a year
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,800
Rate of Depreciation = 5%
Period = from 01/01/ to 31/12/ i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=3,800 X 5/100 X 12/12
Depreciation = 190
Total Depreciation for the year =190
In the Written Down Method or Diminishing Balance Method, the opening value of the asset in the same year will be taken for the calculation of the amount of Depreciation.

https://tutorstips.com/depreciation/

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Also, Check out the solved question of previous Chapters: -

Chapter No. 1 – Introduction to Accounting
Chapter No. 2 – Basic Accounting Terms
Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
Chapter No. 4 – Bases of Accounting
Chapter No. 5 – Accounting Equation
Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
Goods and Services Tax(GST)
Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
Chapter No. 8 – Journal
Chapter No. 9 – Ledger
Chapter No. 10 – Special Purpose Books I – Cash Book
Chapter No. 11 – Special Purpose Books II – Other Books
Chapter No. 12 – Bank Reconciliation Statement
Chapter No. 13 – Trial Balance
Chapter No. 14 – Depreciation
Chapter No. 15 – Provisions and Reserves
Chapter No. 16 – Accounting for Bills of Exchange
Chapter No. 17 – Rectification of Errors
Chapter No. 18 – Financial Statements of Sole Proprietorship
Chapter No. 19 – Adjustments in preparation of Financial Statements
Chapter No. 20 – Accounts from incomplete Records – Single Entry System
Chapter No. 21 – Computers in Accounting
Chapter No. 22 – Accounting Software – Tally
Chapter No. 5 - Accounting Equation
Chapter No. 6 - Accounting Procedures - Rules of Debit and Credit
Goods and Services Tax(GST)
Chapter No. 8 - Journal
Chapter No. 9 - Ledger
Chapter No. 10 – Special Purpose Books I – Cash Book