Question No 31 Chapter No 14 - T.S. Grewal 11 Class

Question No 31 Chapter No 14

31. Shakti Cements purchased on 1st April, 2015 a plant for ₹ 80,000. On 1st July, 2016, it purchased additional plant costing ₹ 48,000. On 1st December, 2017, the plant purchased on 1st April, 2015 was sold for ₹ 42,000 plus IGST @ 12% and on the same date a fresh plant was purchased for ₹ 75,000 plus CGST and SGST @ 6% each. Depreciation is provided at 10% p.a. on the Diminishing Balance Method. Accounts are closed on 31st March each year. Show the plant Account for 3 years (along with working notes).

The solution of Question No 31 Chapter No 14: –

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/04/15	To Bank A/c		80,000	31/03/16	By Deprecation A/c		8,000
				31/03/16	By Balance C/d		72,000
			80,000				80,000
01/04/16	To Balance b/d		72,000	31/03/17	By Deprecation A/c*1		10,800
01/07/16	To Bank A/c		48,000	31/03/17	By Balance C/d		1,09,200
			1,20,000				1,20,000
01/04/17	To Balance b/d		1,09,200	01/12/17	By Deprecation A/c		4,320
01/12/17	To Bank A/c		75,000	01/12/17	By Bank A/c		42,000
				01/12/17	By Loss on sale of Machine A/c		18,480
				31/03/18	By Deprecation A/c*2		6,940
				31/03/18	By Balance C/d		1,12,460
			1,84,200				1,84,200

Working Note:-`

*1:– Calculation of the amount of Depreciation on Machine for the year 2016-17
Purchased on 1st April 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 72,000
Rate of Depreciation = 10%
Period = from 01/04/2015 to 31/03/2016 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=72,000 X10/100 X 12/12
Depreciation =7,200
Purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 48,000
Rate of Depreciation = 10%
Period = from 01/07/2016 to 31/03/2017 i.e.9months
(from the date of purchase/Beginning balance to the end of the financial year)
=48,000 X10/100 X 12/12
Depreciation = 3,600
Total Depreciation for the year = 10,800

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Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Purchase value of machinery as on 1st April 2015	80,000
Less: – Amount of Depreciation charged on the year 2015-16
80,00010%12/12	8,000
Amount of Depreciation charged on the year 2016-17
72,00010%12/12	7,200
Amount of Depreciation charged on the year 2017-18
64,80010%8/12	4,320
Book value of the asset as on 1st March 2017	62,480
Sale Price of Machinery	42,000
Loss on the sale of the asset	18,480

*2:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 44,400
Rate of Depreciation = 10%
Period = from 01/04/2010 to 31/03/2011 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=44,400 X10/100 X 12/12
Depreciation = 4,440
Purchased on 1st December 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 75,000
Rate of Depreciation = 10%
Period = from 01/12/2017 to 31/03/2018 i.e.4months
(from the date of purchase/Beginning balance to the end of the financial year)
=75,000 X10/100 X 4/12
Depreciation = 2,500
Total Depreciation for the year = 6,940

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