# 11th | chapter:15 | Depreciation | Question No. 1 to 4 | Ts grewal Solution 2022-2023

#### Question 2:

Ram & Co. purchased machinery for ` 21,000 on 1st April, 2019. The estimated useful life of the machinery is 10 years, after which its realisable value will be `1,000. Determine the amount of annual depreciation according to the Straight Line Method and prepare Machinery Account for the first three years. The books of account are closed on 31st March every year.

 Book of Ram & Com. Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2019 2020 April 01 Bank A/c 21,000 Mar.31 Depreciation A/c 2,000 Mar.31 Balance c/d 19,000 21,000 21,000 2020 2021 April 01 Balance b/d 19,000 Mar.31 Depreciation A/c 2,000 Mar.31 Balance c/d 17,000 19,000 19,000 2021 2022 April 01 Balance b/d 17,000 Mar.31 Depreciation A/c 2,000 Mar.31 Balance c/d 15,000 17,000 17,000

#### Question 3:

Calculate the Amount of annual Depreciation and Rate of Depreciation under Straight Line Method (SLM) from the following:
Purchased a second-hand machine for
` 96,000, spent  ` 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value  ` 72,000.

Amount of Annual Depreciation=Cost of Machine−Scrap Value of Machine Life in Years

=1,20,000−72,000/4=Rs 12,000

Rate of Depreciation=Amount of DepreciationCost of Machine×100

=12,000/1,20,000×100=10%p.a.

#### Question 4:

1st April, 2019, X Ltd. purchased a machine costing `4,00,000 and spent  ` 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be ` 50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for the first three years. The books are closed on 31st March every year.

 Book of X Ltd. Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2019 2020 April 01 Bank 4,00,000 Mar.31 Depreciation 40,000 April 01 Bank (Erection Expense) 50,000 Balance c/d 4,10,000 4,50,000 4,50,000 2020 2021 April 01 Balance b/d 4,10,000 Mar.31 Depreciation 40,000 Balance c/d 3,70,000 4,10,000 4,10,000 2021 2022 April 01 Balance b/d 3,70,000 Mar.31 Depreciation 40,000 Balance c/d 3,30,000 3,70,000 3,70,000

Calculation of Depreciation:

Depreciation p.a.=4,00,000+50,000-50,000(Scrap Value)10 years

= ` 40,000 p.a.