Question No 02 Chapter No 13
Life of Asset Given in Years
2. Heena Traders purchased a plant for Rs 10,000 on 1st April,2015. installation charges were Rs 2,000 Plants is estimated to have a scrap value of Rs 1,000 at the end of its useful of five years.
Prepare the plants account for the first three years charging depreciation according to straight line method, when books are closed on 31st March every year
The solution of Question No 02 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:
Cost of assets = Cost of Machine + Installation charges = 10,000 + 2,000 = 12,000
Number of years of expected useful life = 5 years
Estimated Retaliated or Scrap value = 1,000
| Amount of Depreciation = | 12,000-1,000 | = 2,200 |
| 5 |
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/15 | To Cash A/c | 12,000 | 31/03/16 | By Deprecation A/c | 2,200 | ||
| 31/03/16 | By Balance C/d | 9,800 | |||||
| 12,000 | 12,000 | ||||||
| 01/03/16 | To Balance b/d | 9,800 | 31/03/17 | By Deprecation A/c | 2,200 | ||
| 31/03/17 | By Balance C/d | 7,600 | |||||
| 9,800 | 9,800 | ||||||
| 01/03/17 | To Balance b/d | 7,600 |
31/03/18 | By Deprecation A/c | 2,200 | ||
| 31/03/18 | By Balance C/d | 5,400 |
|||||
| 7,600 | 7,600 | ||||||
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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
Chapter No. 4 – Journal
Chapter No. 5 – Ledger
Chapter No. 6 – Cash Book
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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)
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