Question No 36 Chapter No 13

Creation of Provision for Depreciation Account

36. Chancal Patel purchased surgical instruments for her hospital for Rs 5,00,000 on 1st July 2015. depreciation was charged @10% p.a. on straight line basis and is transferred to Accumulated Depreciation Account. She purchased another surgical instrument for Rs 1,50,000 on 1st October 2016
Prepare surgical Equipment and Provision for Depreciation Accout for the years 2015-16 to 2017-18

The solution of Question No 36 Chapter No 13:-

 Dr. Surgical Equipment A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 01/07/15 To Bank A/c 5,00,000 31/03/16 By Balance C/d 5,00,000 5,00,000 5,00,000 01/04/16 To Balance b/d 5,00,000 01/10/16 To Bank A/c 1,50,000 31/03/17 By Balance C/d 6,50,000 6,50,000 6,50,000 01/04/17 To Balance b/f 6,50,000 31/03/18 By Balance C/d 6,50,000 6,50,000 6,50,000

 Dr. Provision for Depreciation A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 01/03/16 By Depreciation A/c*1 37,500 01/03/16 To Balance c/d 37,500 37,500 37,500 01/04/16 By Balance b/f 37,500 01/03/17 By Depreciation A/c 57,500 01/03/17 To Balance c/d 95,000 95,000 95,000 01/04/17 By Balance b/f 95,000 13/03/18 By Depreciation A/c*3 65,000 13/03/18 To Balance c/d 1,60,000 1,60,000 1,60,000

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 = 5,00,000
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 the end of the financial year)
= 5,00,000 X 10/100 X 9/ 12
Depreciation = 37,500
Total Depreciation for the year = 37,500

*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,00,000
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 end of the financial year)
= 5,00,000 X 10/100 X 12/ 12
Depreciation = 50,000
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,50,000
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)
= 1,50,000 X 10/100 X 6/ 12
Depreciation = 7,500
Total Depreciation for the year = 57,500

*3:- 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 = 5,00,000
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)
= 5,00,000 X 10/100 X 12/ 12
Depreciation = 50,000
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,50,000
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)
= 1,50,000 X 10/100 X 12/ 12
Depreciation = 15,000
Total Depreciation for the year = 65,000

Depreciation | Meaning | Methods | Examples

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Also, Check out the solved question of all Chapters: –

Chapter No. 1 – Introduction

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)