Question No 32 Chapter No 13 - USHA Publication 11 Class

Question No 32 Chapter No 13

WDV Method and Partial Sale

32.Suleka Sons, whose accounting years is financial years purchased on 1st July 2015, machinery costing Rs 60,000. it purchased further on 1st January 2016, costing Rs 40,000 and on 1st October 2016, costing Rs 20,000. on 1st April 2017, one-third of the machinery installed on 1st July 2015 became obsolete and was sold for Rs 6,000
Show machinery account as it would appear in the books of the firm if the machinery was depreciated by diminishing balance method 10%

The solution of Question No 32 Chapter No 13

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/07/15	To Cash A/c		60,000	31/03/16	By Deprecation A/c*1		5,500
01/01/16	To Bank A/c		40,000	31/03/16	By Balance C/d		94,500
			1,00,000				1,00,000
01/04/16	To Balance b/d		94,500	31/03/17	By Depreciation A/c*2		10,450
01/07/16	To Bank A/c		20,000	31/03/17	By Balance C/d		1,04,050
			1,14,500				1,14,500
01/04/17	To Balance b/d		1,04,050	01/04/17	By Bank A/c		6,000
				01/04/17	By Profit/Loss A/c		10,650
				31/03/18	By Depreciation A/c*3		8,740
				31/03/18	By Balance C/d		78,660
			1,04,050				1,04,050

Working note:-

*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16 
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/07/2015 to 31/03/2016 i.e. 9 months
(from the date of purchase/Beginning balance to end of the financial year)
= 60,000 X 10/100 X 9/ 12
Depreciation = 4,500
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 40,000
Rate of Depreciation = 10%
Period = from 01/01/2016 to 31/03/2016 i.e. 3 months
(from the date of purchase/Beginning balance to end of the financial year)
= 40,000 X 10/100 X 3/ 12
Depreciation = 1,000
Total Depreciation for the year = 5,500

 

*2:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 55,500
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017  i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 55,500 X 10/100 X 12/12
Depreciation = 5,550
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 39,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017  i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 39,000 X 10/100 X 12/12
Depreciation = 3,900
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 20,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 20,000 X 10/100 X 6/ 12
Depreciation = 1,000
Total Depreciation for the year = 10,450

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Purchase value of machinery as on 1st July 2015 1/3	20,000
Less: - Amount of Depreciation charged on the year 2015-16
20,000 *10%* 9/12	1,500
Amount of Depreciation charged on the year 2016-17
18,500 *10%* 12/12	1,850
Book value of the asset as on 1st April 2017	16,650
Sale Price of Machinery	6,000
Loss on the sale of the asset	10,650

*3:- Calculation of the amount of Depreciation on furniture for the year 2018-19
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 33,300
Rate of Depreciation = 10%
Period = from 01/04/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 33,300 X 10/100 X 12/ 12
Depreciation = 3,330
Machinery purchased on 1st Jan 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 35,100
Rate of Depreciation = 10%
Period = from 01/04/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 35,100 X 10/100 X 12/ 12
Depreciation = 3,510
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 19,000
Rate of Depreciation = 10%
Period = from 01/10/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 19,000 X 10/100 X 12/ 12
Depreciation = 1,900
Total Depreciation for the year = 8,740+

This is all about the Question No 32 Chapter No 13 - USHA Publication. You can check out the following article to better understand:

Depreciation | Meaning | Methods | Examples

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Depreciation – Meaning – Methods – Examples -In Hindi

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Chapter No. 1 - Introduction

Chapter No. 2 - Theory Base of Accounting 

Chapter No. 3 - Vouchers and transactions

Chapter No. 4 - Journal

Chapter No. 5 - Ledger

Chapter No. 6 - Cash Book

Chapter No. 7 - Other Subsidiary Books

Chapter No. 8 - Journal Proper

Chapter No. 9 - Trial Balance 

Chapter No. 10 - Bank Reconciliation Statement

Chapter No. 11 - Depreciation

Chapter No. 12 - Provisions and Reserves 

Chapter No. 13 - Bills of Exchange

Chapter No. 14 - Rectification of Errors 

Chapter No. 15 - Financial Statements - (Without Adjustments)

Chapter No. 16 - Financial Statements - (With Adjustments)