Question No 32 Chapter No 13
WDV Method and Partial Sale
32.Suleka Sons, whose accounting years is financial years purchased on 1st July 2015, machinery costing Rs 60,000. it purchased further on 1st January 2016, costing Rs 40,000 and on 1st October 2016, costing Rs 20,000. on 1st April 2017, one-third of the machinery installed on 1st July 2015 became obsolete and was sold for Rs 6,000
Show machinery account as it would appear in the books of the firm if the machinery was depreciated by diminishing balance method 10%
The solution of Question No 32 Chapter No 13
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/07/15 | To Cash A/c | 60,000 | 31/03/16 | By Deprecation A/c*1 | 5,500 | ||
| 01/01/16 | To Bank A/c | 40,000 | 31/03/16 | By Balance C/d | 94,500 | ||
| 1,00,000 | 1,00,000 | ||||||
| 01/04/16 | To Balance b/d | 94,500 | 31/03/17 | By Depreciation A/c*2 | 10,450 | ||
| 01/07/16 | To Bank A/c | 20,000 | 31/03/17 | By Balance C/d | 1,04,050 | ||
| 1,14,500 | 1,14,500 | ||||||
| 01/04/17 | To Balance b/d | 1,04,050 | 01/04/17 | By Bank A/c | 6,000 | ||
| 01/04/17 | By Profit/Loss A/c | 10,650 | |||||
| 31/03/18 | By Depreciation A/c*3 | 8,740 | |||||
| 31/03/18 | By Balance C/d | 78,660 | |||||
| 1,04,050 | 1,04,050 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Jul 2015
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 31/03/2016 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
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 40,000
Rate of Depreciation = 10%
Period = from 01/01/2016 to 31/03/2016 i.e. 3 months
(from the date of purchase/Beginning balance to end of the financial year)
= 40,000 X 10/100 X 3/ 12
Depreciation = 1,000
Total Depreciation for the year = 5,500
*2:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 55,500
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)
= 55,500 X 10/100 X 12/12
Depreciation = 5,550
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 39,000
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)
= 39,000 X 10/100 X 12/12
Depreciation = 3,900
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 20,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 20,000 X 10/100 X 6/ 12
Depreciation = 1,000
Total Depreciation for the year = 10,450
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st July 2015 1/3 | 20,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 20,000 *10%* 9/12 | 1,500 |
| Amount of Depreciation charged on the year 2016-17 | |
| 18,500 *10%* 12/12 | 1,850 |
| Book value of the asset as on 1st April 2017 | 16,650 |
| Sale Price of Machinery | 6,000 |
| Loss on the sale of the asset | 10,650 |
*3:- Calculation of the amount of Depreciation on furniture for the year 2018-19
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 33,300
Rate of Depreciation = 10%
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)
= 33,300 X 10/100 X 12/ 12
Depreciation = 3,330
Machinery purchased on 1st Jan 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 35,100
Rate of Depreciation = 10%
Period = from 01/04/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 35,100 X 10/100 X 12/ 12
Depreciation = 3,510
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 19,000
Rate of Depreciation = 10%
Period = from 01/10/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 19,000 X 10/100 X 12/ 12
Depreciation = 1,900
Total Depreciation for the year = 8,740+
This is all about the Question No 32 Chapter No 13 – USHA Publication. You can check out the following article to better understand:
Depreciation | Meaning | Methods | Examples
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Depreciation – Meaning – Methods – Examples -In Hindi
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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)