Question No 27 Chapter No 14
27. A company purchased on 1st July 2015 machinery costing ₹ 30,000. It further purchased machinery on 1st January 2016 costing ₹ 20,000 and on 1st October 2016 costing ₹ 10,000. On 1st April 2017, one-third of the machinery installed on 1st July 2015 became obsolete and was sold for ₹ 3,000. The company follows the financial year as the accounting year. Show how the Machinery Account would appear in the books of the company if depreciation is charged @ 10% p.a. on Written Down Value Method.
The solution of Question No 27 Chapter No 14: –
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/07/15 | To Bank A/c | 30,000 | 31/03/16 | By Deprecation A/c*1 | 2,750 | ||
| 01/07/15 | To Bank A/c | 20,000 | 31/03/16 | By Balance C/d | 47,250 | ||
| 50,000 | 50,000 | ||||||
| 01/04/16 | To Balance b/d | 47,250 | 31/03/17 | By Deprecation A/c*2 | 5,225 | ||
| 01/10/16 | To Bank A/c | 10,000 | 31/03/17 | By Balance C/d | 52,025 | ||
| 57,250 | 57,250 | ||||||
| 01/04/17 | To Balance b/d | 52,525 | 31/01/17 | By Bank A/c | 3,000 | ||
| 31/01/17 | By Loss on sale of Machinery A/c | 5,325 | |||||
| 31/03/18 | By Deprecation A/c*3 | 4,370 | |||||
| 31/03/18 | By Balance C/d | 39,330 | |||||
| 52,025 |
52,025 | ||||||
Working Note:-`
*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Purchased on 1st July 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 30,000
Rate of Depreciation = 10%
Period = from 01/07/2015 to 31/03/2016 i.e.9months
(from the date of purchase/Beginning balance to the end of the financial year)
=30,000 X10/100 X 9/12
Depreciation =2,250
Purchased on 1st January 2018
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 20,000
Rate of Depreciation = 10%
Period = from 01/01/2016 to 31/03/2016 i.e.2months
(from the date of purchase/Beginning balance to the end of the financial year)
=20,000 X10/100 X 3/12
Depreciation = 500
Total Depreciation for the year = 2,750
*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Purchased on 1st July 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 27,750
Rate of Depreciation = 10%
Period = from 01/03/2016 to 31/03/2017 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=30,000 X10/100 X 12/12
Depreciation = 2,775
Purchased on 1st January 2018
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 19,500
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e.2months
(from the date of purchase/Beginning balance to the end of the financial year)
=20,000 X10/100 X 12/12
Depreciation = 1,950
Purchased on 1st October 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e.6months
(from the date of purchase/Beginning balance to the end of the financial year)
=10,000 X10/100 X 6/12
Depreciation =500
Total Depreciation for the year = 5,225
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st October 2015 (30,000 *1/3) out of which 1/4 sold | 10,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 10,000*10%*9/12 | 750 |
| Amount of Depreciation charged on the year 2016-17 | |
| 9,250*10%*12/12 | 925 |
| Book value of the asset as on 1st March 2017 | 8,325 |
| Sale Price of Machinery | 3,000 |
| Loss on the sale of the asset | 5,325 |
*3:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Purchased on 1st July 2015(2/3)
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 16,650
Rate of Depreciation = 10%
Period = from 01/03/2017 to 31/03/2018 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=16,650 X10/100 X 12/12
Depreciation = 1,665
Purchased on 1st January 2018
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 17,550
Rate of Depreciation = 10%
Period = from 01/01/2018 to 31/03/2018 i.e.2months
(from the date of purchase/Beginning balance to the end of the financial year)
=17,550 X10/100 X 12/12
Depreciation = 1,755
Purchased on 1st October 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 9,500
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2018 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=9,500 X10/100 X 6/12
Depreciation = 950
Total Depreciation for the year = 4,370
Depreciation | Meaning | Methods | Examples
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Also, Check out the solved question of previous Chapters: –
- Chapter No. 1 – Introduction to Accounting
- Chapter No. 2 – Basic Accounting Terms
- Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
- Chapter No. 4 – Bases of Accounting
- Chapter No. 5 – Accounting Equation
- Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
- Goods and Services Tax(GST)
- Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
- Chapter No. 8 – Journal
- Chapter No. 9 – Ledger
- Chapter No. 10 – Special Purpose Books I – Cash Book
- Chapter No. 11 – Special Purpose Books II – Other Books
- Chapter No. 12 – Bank Reconciliation Statement
- Chapter No. 13 – Trial Balance
- Chapter No. 14 – Depreciation
- Chapter No. 15 – Provisions and Reserves
- Chapter No. 16 – Accounting for Bills of Exchange
- Chapter No. 17 – Rectification of Errors
- Chapter No. 18 – Financial Statements of Sole Proprietorship
- Chapter No. 19 – Adjustments in preparation of Financial Statements
- Chapter No. 20 – Accounts from incomplete Records – Single Entry System
- Chapter No. 21 – Computers in Accounting
- Chapter No. 22 – Accounting Software – Tally
- Chapter No. 5 – Accounting Equation
- Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
- Goods and Services Tax(GST)
- Chapter No. 8 – Journal
- Chapter No. 9 – Ledger
- Chapter No. 10 – Special Purpose Books I – Cash Book
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