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Question No 01 Chapter No 13
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Life of Asset Given in Years
1. On 1st April 2016, a machine was purchased for Rs 35,000. The estimated life of the machine is 5 years after which its brake up value will be Rs 5,000 only. Prepare the machinery account for the first three years, by straight-line method assuming that the books are closed on 31st March.
The solution of Question No 01 Chapter No 13:-
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 |
Rate of Deprecation can be calculated with the help of following formula:
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Cost of assets = Cost of Machine = 35,000
Number of years of expected useful life = 5 years
Estimated Retaliated or Scrap value = 5,000
| Amount of Depreciation = | 35,000-5,000 | = 6,000 |
| 5 |
Rate of Depreciation = 6,000 / 35,000 X 100 = 17.14(app.)
Applying the rate of 17.14% on Rs 35,000, Depreciation amount is Rs 5,999.50 approximated to Rs 35,000
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/04/14 | To Cash A/c | 35,000 | 31/03/15 | By Deprecation A/c | 6,000 | ||
| 31/03/15 | By Balance C/d | 29,000 | |||||
| 35,000 | 35,000 | ||||||
| 01/03/15 | To Balance b/d | 29,000 | 31/03/16 | By Deprecation A/c | 6,000 | ||
| 31/03/16 | By Balance C/d | 23,000 | |||||
| 29,000 | 29,000 | ||||||
| 01/03/16 | To Balance b/d | 23,000 | 31/03/17 | By Deprecation A/c | 6,000 | ||
| 31/03/17 | By Balance C/d | 17,000 | |||||
| 23,000 | 23,000 | ||||||
Depreciation | Meaning | Methods | Examples
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Also, Check out the solved question of all Chapters: –
Chapter No. 2 – Theory Base of Accounting
Chapter No. 3 – Vouchers and transactions
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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
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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)
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Chapter No. 16 – Financial Statements – (With Adjustments)