Question No 01 Chapter No 12

1. On 1st April, 2015, a limited company purchased a Machine for 1,90,000 and spent 10,000 on its installation. At the date of purchase, it was estimated that the scrap value of the machine would be 50,000 at the end of sixth year.
Give Machine Account and Depreciation A/c in the books of the Company for 4 years after providing depreciation by Fixed Instalment Method. The books are closed on 31st March every year.

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## The solution of Question No 01 Chapter No 12: –

 Dr. Machinery A/c Cr. Dat Particulars J.F. Amount Date Particulars J.F. Amount 1st Apr.2015 To Balance b/f 2,00,000 31st Mar2016 By Deprecation A/c 25,000 31st Mar2016 By Balance C/d 1,75,000 2,00,000 2,00,000 1st Apr 2016 To Balance b/f 1,75,000 31st Mar2017 By Machinery Disposal A/c 25,000 31st Mar2017 By Balance C/d 1,50,000 2,00,000 2,00,000 1st Apr 2017 To Balance b/f 1,50,000 31st Mar2018 By Deprecation A/c 25,000 31st Mar2018 By Balance C/d 1,25,000 1,50,000 1,50,000 1st Apr.2018 To Balance b/f 1,25,000 31st Mar2019 By Deprecation A/c 25,000 31st Mar2019 By Balance C/d 1,00,000 1,25,000 1,25,000
 Dr. Depreciation A/c Cr. Dat Particulars J.F. Amount Date Particulars J.F. Amount 31st Mar.2016 To Machinery A/c 25,000 31stMar2016 By Balance C/d 25,000 25,000 25,000 1st Apr 2016 To Machinery A/c 25,000 31stMar2017 By Balance C/d 25,000 25,000 25,000 1st Apr 2017 To Machinery A/c 25,000 31st Mar2018 By Balance C/d 25,000 25,000 25,000 1st Apr.2018 To Machinery A/c 25,000 31stMar2019 By Balance C/d 25,000 25,000 25,000

Working Note:
Calculation of Depreciation
The method of calculating the Deprecation rate:

 Amount of Depreciation = Cost of assets- Estimated Realizable or Scrap value Number of years of expected useful life

Cost of assets = Cost of Machine = 2,00,000
Number of years of expected useful life = 6 years
Estimated Retaliated or Scrap value = 50,000

 Amount of Depreciation = 2,00,000 -50,000 6 = 25,000

Rate of Depreciation = 25,000 / 2,00,000 X 100 = 12.5%

Depreciation | Meaning | Methods | Examples

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