Question No 06 Chapter No 13
Calculation of Rate of Depreciation in the Straight Line Method
6. Sanjay Sharma purchased office equipment for Rs 1,07,000 on 1st April 2014 and spent Rs 3,000 on its freight. The life of the estimated as 20 years, when it will be sold for Rs 10,000
Calculate the rate of Depreciation per annum and prepare offices equipment accounts for the first four years. Books are closed on 31st March every year
The solution of Question No 06 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 |
Cost of assets = Cost of Office equipment + Freight charges = 1,07,000 + 3,000 = 10,000
Number of years of expected useful life = 20 years
Estimated Retaliated or Scrap value = 10,000
| Amount of Depreciation = | 1,10,000 – 10,000 | = 5,000 |
| 20 |
Rate of Depreciation = 5,000 / 1,10,000 X 100 = 5%
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/14 | To Cash A/c | 1,10,000 | 31/03/15 | By Deprecation A/c | 5,000 | ||
| 31/03/15 | By Balance C/d | 1,05,000 | |||||
| 1,10,000 | 1,10,000 | ||||||
| 01/03/16 | To Balance b/d | 1,05,000 | 31/03/17 | By Deprecation A/c | 5,000 | ||
| 31/03/17 | By Balance C/d | 1,00,000 | |||||
| 1,05,000 | 1,05,000 | ||||||
| 01/03/17 | To Balance b/d | 1,00,000 |
31/03/18 | By Deprecation A/c | 5,000 | ||
| 31/03/18 | By Balance C/d | 95,000 |
|||||
| 1,00,000 | 1,00,000 | ||||||
| 01/04/18 | To Balance b/d | 95,000 | 31/03/19 | By Deprecation A/c | 5,000 | ||
| 31/03/19 | By Balance C/d | 90,000 | |||||
| 95,000 | 95,000 | ||||||
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
Chapter No. 4 – Journal
Chapter No. 5 – Ledger
Chapter No. 6 – Cash Book
Chapter No. 7 – Other Subsidiary Books
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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)