Question No 39 Chapter No 13
Creation of Provision for Depreciation Account
39. Nagina purchased machinery for Rs 60,000 on 1st October 2015. Another machinery was purchased on 1st July 2016 for Rs 40,000. Machinery purchased on 1st October 2015 was sold Rs 34,000 on 31st March 2018
Prepare Machinery account and Provision for Depreciation Account for 3 accounting years when depreciation is charged @10% p.a. on straight line Method and books are closed on 31st March every year
The solution of Question No 39 Chapter No 13:-
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/10/15 | To Bank A/c | 60,000 | |||||
| 31/03/16 | By Balance C/d | 60,000 | |||||
| 60,000 | 60,000 | ||||||
| 01/04/16 | To Balance b/d | 60,000 | |||||
| 01/07/16 | To Bank A/c | 40,000 | 31/03/17 | By Balance C/d | 1,00,000 | ||
| 1,00,000 | 1,00,000 | ||||||
| 01/04/17 | To Balance b/f | 1,00,000 | 01/04/17 | By Bank A/c | 34,000 | ||
| 01/04/17 | By Provision for Dep. | 15,000 | |||||
| 01/04/17 | By Profit/loss | 11,000 | |||||
| 31/03/18 | By Balance C/d | 40,000 | |||||
| 1,00,000 | 1,00,000 | ||||||
| Dr. | Provision for Depreciation A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 31/03/16 | By Depreciation A/c*1 | 3,000 | |||||
| 31/03/16 | To Balance c/d | 3,000 | |||||
| 3,000 | 3,000 | ||||||
| 01/04/16 | By Balance b/f | 3,000 | |||||
| 31/03/17 | By Depreciation A/c*2 | 9,000 | |||||
| 31/03/17 | To Balance c/d | 12,000 | |||||
| 12,000 | 12,000 | ||||||
| 01/04/17 | To Machinery A/c | 15,000 | 01/04/17 | By Balance b/f | 12,000 | ||
| 31/03/18 | By Depreciation A/c*3 | 10,000 | |||||
| 31/03/18 | To Balance c/d | 7,000 | |||||
| 22,000 | 22,000 |
||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/10/2015 to 31/03/2016 i.e.10 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 60,000 X 10/100 X 6/ 12
Depreciation = 3,000
Total Depreciation for the year = 3,000/-
*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
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)
= 60,000 X 10/100 X 12/ 12
Depreciation = 6,000
Machinery purchased on 1st Jul 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 40,000
Rate of Depreciation = 10%
Period = from 01/07/2016 to 31/03/2017 i.e.9 months
(from the date of purchase/Beginning balance to end of the financial year)
= 40,000 X 10/100 X 9/ 12
Depreciation = 3,000
Total Depreciation for the year =9,000/-
*3:– Calculation of amount of Depreciation on furniture for year 2017-18
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
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)
= 97,200 X 10/100 X 12/ 12
Depreciation= 6,000
Machinery purchased on 1st Jul 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 40,000
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)
= 40,000 X 10/100 X 12/ 12
Depreciation = 4,000
Total Depreciation for the year = 10,000/-
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of Equipment as on 1st Oct, 2015 | 60,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 60,000 *10%* 6/12 | 3,000 |
| Amount of Depreciation charged on the year 2016-17 | |
| 60,0000 *10%* 12/12 | 6,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 60,000 *10%* 9/12 | 6,000 |
| Book value of the asset as on 1st March 2018 | 45,000 |
| Sale Price of Machinery | 34,000 |
| Loss on the sale of the asset | 11,000 |
This is all about the Question No 39 Chapter No 13 – USHA Publication. You can check out the following article to better understand:
Depreciation | Meaning | Methods | Examples
You Can also read all above articles in Hindi on our Hindi Website
Depreciation – Meaning – Methods – Examples -In Hindi
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You can also Check out the solved question of other Chapters: –
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
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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)