Question No 25 Chapter No 13
Comparison of Methods of Depreciation
25. Alisha purchased machinery on 1st April,2014 for Rs 60,000. depreciation is written off at the rate 10% p.a. show machinery and depreciation account under both the fixed instalment and reducing instalment methods for five years. The firm closes its books on 31st March each year.
The solution of Question No 25 Chapter No 13:-
Fixed Instalment Methods
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/14 | To Cash A/c | 60,000 | 31/03/15 | By Deprecation A/c*1 | 6,000 | ||
| 31/03/16 | By Balance C/d | 54,000 | |||||
| 60,000 | 60,000 | ||||||
| 01/04/15 | To Balance b/d | 54,000 | 31/03/16 | By Depreciation A/c | 6,000 | ||
| 31/03/16 | By Balance C/d | 48,000 | |||||
| 54,000 | 54,000 | ||||||
| 01/04/16 | To Balance b/d | 48,000 | 31/03/17 | By Deprecation A/c | 6,000 | ||
| 31/03/17 | By Balance C/d | 42,000 | |||||
| 48,000 | 48,000 | ||||||
| 01/04/17 | To Balance b/d | 42,000 | 31/03/18 | By Deprecation A/c | 6,000 | ||
| 31/03/18 | By Balance C/d | 36,000 | |||||
| 42,000 | 42,000 | ||||||
| 01/04/18 | To Balance b/d | 36,000 | 31/03/19 | By Deprecation A/c | 6,000 | ||
| 31/03/19 | By Balance C/d | 30,000 | |||||
| 36,000 | 36,000 | ||||||
| Dr. | Depreciation A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 31/03/15 | To Machinery A/c | 6,000 | |||||
| 31/03/15 | By Profit & Loss A/c | 6,000 | |||||
| 6,000 | 6,000 | ||||||
| 31/03/16 | To Machinery A/c | 6,000 | |||||
| 31/03/16 | By Profit & Loss A/c | 6,000 | |||||
| 6,000 | 6,000 | ||||||
| 31/03/17 | To Machinery A/c | 6,000 | |||||
| 31/03/17 | By Profit & Loss A/c | 6,000 | |||||
| 6,000 | 6,000 | ||||||
| 31/03/18 | To Machinery A/c | 6,000 | |||||
| 31/03/18 | By Profit & Loss A/c | 6,000 | |||||
| 6,000 | 6,000 | ||||||
| 31/03/19 | To Machinery A/c | 6,000 | |||||
| 31/03/19 | By Profit & Loss A/c | 6,000 | |||||
| 6,000 | 6,000 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2014-15
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/04/2014 to 31/03/2015 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
Total Depreciation for the year = 6,000
Reducing Instalment Methods
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/14 | To Cash A/c | 60,000 | 31/03/15 | By Deprecation A/c*1 | 6,000 | ||
| 31/03/16 | By Balance C/d | 54,000 | |||||
| 60,000 | 60,000 | ||||||
| 01/04/15 | To Balance b/d | 54,000 | 31/03/16 | By Depreciation A/c*2 | 5,400 | ||
| 31/03/16 | By Balance C/d | 48,600 | |||||
| 54,000 | 54,000 | ||||||
| 01/04/16 | To Balance b/d | 48,600 | 31/03/17 | By Deprecation A/c*3 | 4,860 | ||
| 31/03/17 | By Balance C/d | 43,730 | |||||
| 48,600 | 48,600 | ||||||
| 01/04/17 | To Balance b/d | 43,740 | 31/03/18 | By Deprecation A/c*3 | 4,374 | ||
| 31/03/18 | By Balance C/d | 39,366 | |||||
| 43,730 | 43,730 | ||||||
| 01/04/18 | To Balance b/d | 39,366 | 31/03/19 | By Deprecation A/c*3 | 3,937 | ||
| 31/03/19 | By Balance C/d | 35,429 | |||||
| 39,366 | 39,366 | ||||||
| Dr. | Depreciation A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 31/03/15 | To Machinery A/c | 6,000 | |||||
| 31/03/15 | By Profit & Loss A/c | 6,000 | |||||
| 6,000 | 6,000 | ||||||
| 31/03/16 | To Machinery A/c | 5,400 | |||||
| 31/03/16 | By Profit & Loss A/c | 5,400 | |||||
| 5,400 | 5,400 | ||||||
| 31/03/17 | To Machinery A/c | 4,860 | |||||
| 31/03/17 | By Profit & Loss A/c | 4,860 | |||||
| 4,860 | 4,860 | ||||||
| 31/03/18 | To Machinery A/c | 4,374 | |||||
| 31/03/18 | By Profit & Loss A/c | 4,374 | |||||
| 4,374 | 4,374 | ||||||
| 31/03/19 | To Machinery A/c | 3,937 | |||||
| 31/03/19 | By Profit & Loss A/c | 3,937 | |||||
| 3,937 | 3,937 | ||||||
*1:– Calculation of the amount of Depreciation on furniture for the year 2014-15
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/10/2014 to 31/03/2015 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 60,000 X 20/100 X 12/ 12
Depreciation = 6,000
Total Depreciation for the year = 6,000
*2:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 54,000
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 the end of the financial year)
= 54,000 X 10/100 X 12/ 12
Depreciation = 5,400
Total Depreciation for the year = 5,400
*3:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 48,600
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)
= 48,600 X 20/100 X 12/ 12
Depreciation = 4,860
Total Depreciation for the year = 4,860
*4:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 43,740
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)
= 43,740 X 20/100 X 12/ 12
Depreciation = 4,374
Total Depreciation for the year = 4,374
*5:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 39,366
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)
= 39,366 X 20/100 X 12/ 12
Depreciation = 3,937
Total Depreciation for the year = 3,937
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)