Question No 8 Chapter No 14 – T.S. Grewal 11 Class

Question No 8 Chapter No 14

8. A company whose accounting year is the financial year purchased on 1st July 2014 machinery costing Rs 30,000
It purchased further machinery on 1st January 2015 costing Rs 20,000 and on 1st October 2015 costing Rs 10,000
On 1st April 2016 one-third of the machinery installed on 1st July 2014 became obsolete and was sold for Rs 3,000
Show how Machinery Account would appear in the books of the company. It is given that machinery was depreciated by Fixed Instalment Method at 10%p.a. what would be the value of Machinery Account on 1st April 2017?

The solution of Question No 8 Chapter No 14: –

Working note:-

*1:- Calculation of the amount of Depreciation on machinery for F/Y 2014-15
Purchased on 1st July 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 30,000
Rate of Depreciation = 10%
Period = from 01/07/14 to 31/03/15 i.e. 9 months
(from the date of purchase/Beginning balance to the end of the financial year)
=30,000 X 10/100 X 9/12
Depreciation =2,250
Purchased 1st January 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 20,000
Rate of Depreciation = 10%
Period = from 30/9/14 to 31/03/15 i.e. 3 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 20,000 X 10/100 X 3/12
Depreciation = 500
Total Depreciation for the finical year 2014-15 =2,750

*2:- Calculation of the amount of Depreciation on machinery for F/Y 2015-16
Purchased on 1st July 2014 and on 1 January 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 50,000
Rate of Depreciation = 10%
Period = from 01/07/15 to 31/03/16 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=50,000 X 10/100 X 12/12
Depreciation =5,000
Purchased 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,000
Rate of Depreciation = 10%
Period = from 01/10/15 to 31/03/16 i.e. 3 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 10,000 X 10/100 X 6/12
Total Depreciation for the finical year 2015-16=5,500

One- third of the Machinery was sold = 30,000*1/3 = 10,000

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 previous Chapters: –

• Chapter No. 1 – Introduction to Accounting
• Chapter No. 2 – Basic Accounting Terms
• Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
• Chapter No. 4 – Bases of Accounting
• Chapter No. 5 – Accounting Equation
• Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
• Goods and Services Tax(GST)
• Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
• Chapter No. 8 – Journal
• Chapter No. 9 – Ledger
• Chapter No. 10 – Special Purpose Books I – Cash Book
• Chapter No. 11 – Special Purpose Books II – Other Books
• Chapter No. 12 – Bank Reconciliation Statement
• Chapter No. 13 – Trial Balance
• Chapter No. 14 – Depreciation
• Chapter No. 15 – Provisions and Reserves
• Chapter No. 16 – Accounting for Bills of Exchange
• Chapter No. 17 – Rectification of Errors
• Chapter No. 18 – Financial Statements of Sole Proprietorship
• Chapter No. 19 – Adjustments in preparation of Financial Statements
• Chapter No. 20 – Accounts from incomplete Records – Single Entry System
• Chapter No. 21 – Computers in Accounting
• Chapter No. 22 – Accounting Software – Tally
• Chapter No. 5 – Accounting Equation
• Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
• Goods and Services Tax(GST)
• Chapter No. 8 – Journal
• Chapter No. 9 – Ledger
• Chapter No. 10 – Special Purpose Books I – Cash Book

Check out T.S. Grewal +1 Book 2019 @ Official Website of Sultan Chand Publication