Question 1:
Calculate
annual depreciation and rate of depreciation under Straight Line Method in each
of the alternative cases:
Case
|
Purchase of Machinery
|
Installation Charges
|
Estimated Scrap Value
|
Estimated Useful Life
(In Years)
|
(a)
|
1,80,000
|
20,000
|
10,000
|
5
|
(b)
|
4,75,000
|
25,000
|
50,000
|
5
|
(c)
|
90,000
|
10,000
|
20,000
|
10
|
(d)
|
3,40,000
|
60,000
|
40,000
|
10
|
(e)
|
90,000
|
10,000
|
20,000
|
4
|
Answer:
Case
|
Amount of Annual Depreciation
|
Rate of Depreciation
|
|
|
Total Cost of
Assets – Scarp value ÷ Useful life
|
Amount Depreciation
× 100 ÷ Total Cost of Assets
|
1
|
= (1,80,000+20,000) - 10,000 ÷ 5
= 38,000
|
38,000×100÷2,00,000 =19%
|
2
|
=(4,75,000+25,000) - 50,000 ÷ 5
=90,000
|
90,000×100÷5,00,000 =18%
|
3
|
= (90,000+10,000) - 20,000 ÷ 10
=8,000
|
8,000×100÷ 1,00,000 = 8%
|
4
|
=(3,40,000+60,000) - 40,000 ÷ 10
=36,000
|
36,000×100÷ 4,00,000 = 9%
|
5
|
= (90,000+10,000) - 20,000 ÷ 4
=20,000
|
20,000×100÷1,00,000 = 20%
|
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.
Answer:
|
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.
Answer:
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.
Answer:
|
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.
Class : 11th | Ts Grewal solution 2022-2023
Chapter 15: Depreciation
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