Question No 02 Chapter No 12

Question No 02 Chapter No 12

02.On 1st April, 2015, a Company bought Plant and Machinery costing 68,000. It is estimated that its working life is 10 years, at the end of which it will fetch 8,000. Additions are made on 1st April, 2016 to the value of 40,000 (Residual value 4,000). More additions are made on Oct. 1, 2017 to the value of 9,800 (Break up value 800). The working life of both the additional Plant and machinery is 20 years.
Show the Plant and Machinery account for the first four years, if depreciation is written off according to Straight Line Method. The accounts are closed on 31st March every year.

The solution of Question No 02 Chapter No 12: –

Dr.Machinery A/cCr.
DatParticulars
J.F.AmountDateParticulars
J.F.Amount
1st Apr.2015To Bank A/c (P1) 68,00031st Mar2016By Deprecation A/c 6,000
    31st Mar2016By Balance C/d 62,000
   68,000   68,000
1st Apr 2016To Balance b/f 62,00031st Mar2017By Deprecation A/cP1 & P2(6,000 + 1,800) 7,800
1st Apr 2016To Bank A/c (P2) 40,00031st Mar2017By Balance C/d
 94,000
   1,02,000   1,02,000
1st Apr 2017To Balance b/f 94,20031st Mar2018By Deprecation A/cP1,P2 & P3(6,000 + 1,800+ 225) 25,000
1st Oct 2017To Bank A/c (P3) 9,80031st Mar2018By Balance C/d 95,975
   1,04,000
   1,04,000

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

P1 Cost of assets = Cost of Machine = 68,000
Number of years of expected useful life = 10 years
Estimated Retaliated or Scrap value = 8,000

Amount of Depreciation =68,000 -8,000
10
   
 =6,000

P2 Cost of assets = Cost of Machine = 40,000
Number of years of expected useful life = 10 years
Estimated Retaliated or Scrap value = 4,000

Amount of Depreciation =40,000 – 4,000
20
   
 =1,800

P3 Cost of assets = Cost of Machine = 9,800
Number of years of expected useful life = 10 years
Estimated Retaliated or Scrap value = 800

Amount of Depreciation =9,800 – 800
20
   
 =450

Depreciation | Meaning | Methods | Examples

Comment if you have any question.

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D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution

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ISC Accounts 11 20 Image min 197x300 - Question No 02 Chapter No 12 - D.K Goal 11 Class
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