Question No 10 Chapter No 13
Addition to Assets and Life Given in Years
10. Mahesh Grover purchased machinery with a useful life of 10 years for Rs 86,000 and spent Rs 4,000 on its installation on 1st April 2014. Another machine was purchased on 1st July 2015 for Rs 60,000 on which 10% p.a. depreciation will be charged on Original cost. On 1st October 2016, another machine was purchased for Rs 65,000. life of this machine is 8 Years and its residual value Rs 1,000
Prepare Machinery Account for the first four years, when books are closed on 31st March every year.
The solution of Question No 10 Chapter No 13:-
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/01/14 | To Cash A/c | 90,000 | 31/03/15 | By Deprecation A/c*1 | 9,000 | ||
| 31/03/15 | By Balance C/d | 81,000 | |||||
| 90,000 | 90,000 | ||||||
| 01/03/15 | To Balance b/d | 81,000 | 31/03/16 | By Deprecation A/c*2 | 13,500 | ||
| 01/07/16 | To Cash A/c | 60,000 | 31/03/16 | By Balance C/d | 1,27,500 | ||
| 1,41,000 | 1,41,000 | ||||||
| 01/03/16 | To Balance b/d | 1,27,500 |
31/03/17 | By Deprecation A/c*3 | 19,000 | ||
| 01/10/16 | To Cash A/c | 65,000 | 31/03/17 | By Balance C/d | 1,73,500 |
||
| 1,92,500 | 1,92,500 | ||||||
| 01/03/17 | To Balance b/f | 1,73,500 | 31/03/18 | By Deprecation A/c*4 | 23,000 | ||
| 31/03/18 | By Balance C/d | 1,50,500 |
|||||
| 1,73,500 |
1,73,500 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2014-15
Machinery purchased on 1st April 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 90,000
Rate of Depreciation = 10%
Period = from 01/01/2014 to 31/03/2015 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 90,000 X6/100 X 12 / 12
Depreciation = 9,000
Total Depreciation for the year = 9,000
*2:- Calculation of amount of Depreciation on furniture for year 2015-16
Machinery purchased on 1st April 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 90,000
Rate of Depreciation = 10%
Period = from 01/04/2015 to 31/03/2016 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 90,000 X10/100 X 12 / 12
Depreciation = 9,000
Machinery purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/07/2015 to 31/03/206 i.e.9 months
(from the date of purchase/Beginning balance to end of the financial year)
= 60,000 X 10/100 X 9 / 12
Depreciation = 4,500
Total Depreciation for the year = 13,500
*3:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st April 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 90,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 90,000 X10/100 X 12 / 12
Depreciation = 9,000
Machinery purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/07/2016 to 31/03/207 i.e.12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 60,000 X 10/100 X 12 / 12
Depreciation = 6,000
The method of calculating the amount of Deprecation furniture purchased on 1st October 2016:
| Amount of Depreciation = | Cost of assets- Estimated Realizable or Scrap value |
| Number of years of expected useful life |
Cost of assets = Cost of Machinery = 65,000
Number of years of expected useful life = 8 years
Estimated Retaliated or Scrap value = 1,000
| Amount of Depreciation = | 65,000-1,000 | = 8,000 |
| 8 | ||
| = 8,000 6/12 | ||
| = 4,000 |
Total Depreciation for the year = 19,000
*4:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st April 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 90,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 90,000 X10/100 X 12 / 12
Depreciation = 9,000
Machinery purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/07/2016 to 31/03/207 i.e.12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 60,000 X 10/100 X 12 / 12
Depreciation = 6,000
The method of calculating the amount of Deprecation furniture purchased on 1st October 2016:
| Amount of Depreciation = | Cost of assets- Estimated Realizable or Scrap value |
| Number of years of expected useful life |
Cost of assets = Cost of Machinery = 65,000
Number of years of expected useful life = 8 years
Estimated Retaliated or Scrap value = 1,000
| Amount of Depreciation = | 65,000-1,000 | = 8,000 |
| 8 |
Total Depreciation for the year = 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
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
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)