Question No 37 Chapter No 13

Creation of Provision for Depreciation Account

37. A company purchased a second-hand plant for Rs 60,000. it immediately spends Rs 10,000 on overhauling. The plant was put to use on April 1, 2016. After having it used for two years, it was sold for Rs 50,000
You are required to Prepare plant Account and provision for depreciation account, when depreciation is charged at the rate of 10% p.a. on straight-line method and book are closed on 31st March every year.

The solution of Question No 37 Chapter No 13:-

 Dr. Surgical Equipment A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 01/04/16 To Bank A/c 70,000 31/03/17 By Balance C/d 70,000 70,000 70,000 01/04/17 To Balance b/d 70,000 31/03/18 By Balance C/d 70,000 70,000 70,000

 Dr. Provision for Depreciation A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 31/03/17 By Depreciation A/c*1 7,000 13/03/17 To Balance c/d 7,000 7,000 7,000 01/04/17 By Balance b/f 7,000 31/03/18 By Depreciation A/c 7,000 31/03/18 To Balance c/d 14,000 14,000 14,000

 Dr. Plant Disposal A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 31/03/19 By Bank A/c 50,000 31/03/19 By Provision for Dep. A/c 14,000 31/03/19 By Profit/Loss A/c 6,000 13/03/17 To Bank A/c 70,000 70,000 70,000

Working note:-

*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 70,000
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)
= 70,000 X 10/100 X 12/ 12
Depreciation = 7,000
Total Depreciation for the year = 7,000

Depreciation | Meaning | Methods | Examples

Thanks, Please Like and share with your friends

Comment if you have any question.

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)

## About us, we are here to improve your knowledge in all financial & Business related topics and to get better carrier opportunities. The author has about 10-year Experience in tuition Business. It is very difficult to teach a large number of students with a personal touch or in a classroom.

### Animation's Resource websites

All Icons and images used on my website were downloaded from the following website please go and download free:-

close