Question No 39 Chapter No 13 – USHA Publication 11 Class

Question No 39 Chapter No 13

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 31/03/18 By Balance C/d   1,00,000
      1,00,000       1,00,000
01/04/17 To Balance b/f   1,00,000 01/04/18 By Bank A/c   34,000
        01/04/18 By Provision for Dep.   15,000
        01/04/18 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
        01/03/16 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
        01/03/17 By Depreciation A/c*2   3,000
01/03/17 To Balance c/d   12,000        
      12,000       12,000
1/03/17 To Machinery A/c   12,000 01/04/17 By Balance b/f   48,600
        13/03/18 By Depreciation A/c*3   10,000
13/03/18 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


*3:- Calculation of the amount of Depreciation on furniture for the year 2018-19

Machinery purchased on 1st Apr 2016 ½
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 97,200
Rate of Depreciation = 10%
Period = from 01/04/2018 to 31/03/2019 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 = 9,720
Machinery purchased on 1st Oct 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 57,000
Rate of Depreciation = 10%
Period = from 01/04/2018 to 31/03/2019 i.e.12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 57,000 X 10/100 X 12/ 12
Depreciation = 5,700
Total Depreciation for the year = 15,420

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)

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