Question No 26 Chapter No 13
Comparison of Methods of Depreciation
26. On 1st April 2015, machine was bought by Manider Kaur for Rs 1,00,000. its life is estimated at 4 years. Depreciation is to be written off at 40% p.a. on the diminishing balance method. Show the machinery Account for four years, assuming that the machine is sold as scrap on 31st March, 2019 for Rs 20,000. books are closed on 31st March
The solution of Question No 26 Chapter No 13:-
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/15 | To Cash A/c | 1,00,000 | 31/03/16 | By Deprecation A/c*1 | 40,000 | ||
| 31/03/16 | By Balance C/d | 60,000 | |||||
| 1,00,000 | 1,00,000 | ||||||
| 01/04/16 | To Balance b/d | 60,000 | 31/03/17 | By Depreciation A/c | 24,000 | ||
| 31/03/17 | By Balance C/d | 36,000 | |||||
| 60,000 | 60,000 | ||||||
| 01/04/17 | To Balance b/d | 36,000 | 31/03/18 | By Deprecation A/c | 14,400 | ||
| 31/03/18 | By Balance C/d | 21,600 | |||||
| 36,000 | 36,000 | ||||||
| 01/04/18 | To Balance b/d | 21,600 | 31/03/19 | By Deprecation A/c | 8,640 | ||
| 31/03/19 | To Profit/loss A/c | 7,040 | 31/03/19 | By Bank A/c | 20,000 | ||
| 28,640 | 28,640 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,00,000
Rate of Depreciation = 40%
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)
= 1,00,000 X 40/100 X 12/ 12
Depreciation = 40,000
Total Depreciation for the year = 40,000
*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 40%
Period = from 01/10/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 60,000 X 40/100 X 12/ 12
Depreciation = 24,000
Total Depreciation for the year = 24,000
*3:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Apr 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 36,000
Rate of Depreciation = 40%
Period = from 01/04/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 36,000 X 40/100 X 12/ 12
Depreciation = 14,400
Total Depreciation for the year = 14,400
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*4:- Calculation of the amount of Depreciation on furniture for the year 2018-19
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 21,600
Rate of Depreciation = 40%
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)
= 21,600 X 40/100 X 12/ 12
Depreciation = 8,640
Total Depreciation for the year = 8,640
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st April 2015 | 1,00,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 1,00,000*40%* 12/12 | 40,000 |
| Amount of Depreciation charged on the year 2016-17 | |
| 60,000*40%*12/12 | 24,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 36,000*40%*12/12 | 14,400 |
| Amount of Depreciation charged on the year 2018-19 | |
| 21,600 *40%*12/12 | 8,640 |
| Book value of an asset as on 31st March 2019 | 12,960 |
| Sale Price of Machinery | 20,000 |
| Profit on the sale of the asset | 7,040 |
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
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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
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Chapter No. 15 – Financial Statements – (Without Adjustments)
Chapter No. 16 – Financial Statements – (With Adjustments)