# 11th | chapter:15 | Depreciation | Question No. 9 to 12 | Ts grewal Solution 2022-2023

#### Question 9:

On 1st April, 2018, A Ltd. purchased a machine for  ` 2,40,000 and spent  ` 10,000 on its erection. On 1st October, 2018 an additional machinery costing  ` 1,00,000 was purchased. On 1st October, 2020, the machine purchased on 1st April, 2018 was sold for  ` 1,43,000 and on the same date, a new machine was purchased at cost of  ` 2,00,000.
Show the Machinery Account for the first four financial years after charging Depreciation at 5% p.a. by the Straight Line Method.

Machinery Account

 Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2018 2019 April 01 Bank (M1) 2,50,000 March 31 Depreciation Oct. 01 Bank (M2) 1,00,000 M1 12,500 M2 (6 Months) 2,500 15,000 March 31 Balance c/d M1 2,37,500 M2 97,500 3,35,000 3,50,000 3,50,000 2019 2020 April 01 Balance b/d March 31 Depreciation M1 2,37,500 M1 12,500 M2 97,500 3,35,000 M2 5,000 17,500 March 31 Balance c/d M1 2,25,000 M2 92,500 3,17,500 3,35,000 3,35,000 2020 2020 April 01 Balance b/d Oct. 01 Depreciation (for 6 months) 6,250 M1 2,25,000 Oct. 01 Bank (M1 sold) 1,43,000 M2 92,500 3,17,500 Oct. 01 Profit and Loss (loss on sale) 75,750 2021 July 01 Bank (M3) 2,00,000 March 31 Depreciation M2 5,000 M3 (for 6 months) 5,000 10,000 March 31 Balance c/d M2 87,500 M3 1,95,000 2,82,500 5,17,500 5,17,500 2021 2022 April 01 Balance b/d March 31 Depreciation M2 87,500 M2 5,000 M3 1,95,000 2,82,500 M3 10,000 15,000 March 31 Balance c/d M2 82,500 M3 1,85,000 2,67,500 2,82,500 2,82,500

Working Notes:

1. Calculation of Deprecation

Machine 1= 2,50,000×5/100=  `12,500 p.a.

Machine 2= 1,00,000×5/100=  `5,000 p.a.

Machine 3= 2,00,000×4/100=  `10,000 p.a.

2. Calculation of profit or loss on sale of Machine

 Particulars ( `) Book Value on April 01, 2020 2,25,000 Less: Deprecation for six month (6,250) Book Value on Oct. 01, 2021 2,18,750 Less: Sale Proceeds (1,43,000) Loss on Sale of Machine 75,750

#### Question 10:

A Van was purchased on 1st April, 2019 for `60,000 and  ` 5,000 was spent on its repair and registration. On 1st October, 2020 another van was purchased for `70,000. On 1st April, 2021, the first van purchased on 1st April, 2019 was sold for `45,000 and a new van costing `1,70,000 was purchased on the same date. Show the Van Account from 2019-20 to 2021-22 on the basis of Straight Line Method, if the rate of Depreciation charged is 10% p.a. Assume that books are closed on 31st March every year.

 Van Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2019 2020 April 01 Bank A/c (I) 65,000 March 31 Depreciation A/c (I) 6,500 March 31 Balance c/d (I) 58,500 65,000 65,000 2020 2021 April 01 Balance b/d (I) 58,500 March 31 Depreciation A/c Oct. 01 Bank A/c (II) 70,000 (I) 6,500 (II) (for 6 month) 3,500 10,000 March 31 Balance c/d (I) 52,000 (II) 66,500 1,18,500 1,28,500 1,28,500 2021 2021 April 01 Balance b/d April 01 Bank A/c (I) 45,000 (I) 52,000 April 01 Profit and Loss A/c (Loss on Sale) 7,000 2022 (II) 66,500 1,18,500 March 31 Depreciation A/c April 01 Bank A/c (III) 1,70,000 (II) 7,000 (III) 17,000 24,000 March 31 Balance c/d (II) 59,500 (III) 1,53,000 2,12,500 2,88,500 2,88,500

Working Notes

1. Calculation of Annual Depreciation

Maruti  Van (1) = 65,000×10/100=  `6,500

Maruti  Van (1I) = 70,000×10/100=  `7,000

Maruti  Van (1II) =1,70,000×10/100=  `17,000

2. Calculation of profit or loss on sale of Van (I)

 Particulars ( `) Book Value on Apr. 01, 2021 52,000 Less: Sale of Van (45,000) Loss on Sale of Van 7,000

#### Question 11:

A company whose accounting year is a financial year, purchased on 1st July, 2019 machinery costing  ` 30,000.
It purchased further machinery on 1st January, 2020 costing  ` 20,000 and on 1st October, 2020 costing
` 10,000.
On 1st April, 2021, one-third of the machinery installed on 1st July, 2019 became obsolete and was sold for  ` 3,000.
Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2022?

 Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2019 2020 July 01 Bank (I) 30,000 March 31 Depreciation 2019 I (for 9 months) 2,250 Jan. 01 Bank (II) 20,000 II 500 2,750 March 31 Balanced c/d I 27,750 II 19,500 47,250 50,000 50,000 2020 2021 April 01 Balance b/d March 31 Depreciation I 27,750 I 3,000 II 19,500 47,250 II 2,000 III 500 5,500 Oct. 01 Bank (III) 10,000 March 31 Balance c/d I 24,750 II 17,500 III 9,500 51,750 57,250 57,250 2021 Balance b/d 2021 April 01 I 24,750 April 01 Bank I(1/3rd portion) 3,000 II 17,500 April 01 Profit and Loss (Loss on Sale of I) 5,250 III 9,500 51,750 2022 March 31 Depreciation I (on 2/3rd portion) 2,000 II 2,000 III 1,000 5,000 March 31 Balance c/d I (on 2/3rd portion) 14,500 II 15,500 III 8,500 38,500 51,750 51,750

Working Notes

1. Calculation of Depreciation

Machine 1=30,000×10/100= ` 3,000

And Drepreciation of  2/3rd proportion=3,000×2/3= `2,000

Machine II =20,000×10/100=  ` 2,000p.a.

Machine III =10,000×10/100=  ` 1,000p.a.

Calculation of profit or loss on sale of 1/3rd Portion of Machine I

 Particulars ( `) Book Value of 1/3rd portion of Machine I on April 01, 2021 (24,750 × 1/3) 8,250 Less: Sale Value (3,000) Loss on sale 5,250

Question 12:

On 1st April, 2010, Plant and Machinery was purchased for `1,20,000. New machinery was purchased on 1st October, 2010 for `50,000 and on 1st July, 2011, for `25,000. On 1st January, 2013, a machinery of the original value of `20,000 which was included in the machinery purchased on 1st April, 2010, was sold for `6,000. Prepare Plant and Machinery A/c for three years after providing depreciation at 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year. (KVS)

 Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2010 2011 April 01 Bank A/c (M1) 1,20,000 Mar.31 Depreciation A/c Oct. 01 Bank A/c (M2) 50,000 M1 – 12,000 (WN3) M2 – 2,500 14,500 Mar.31 Balance c/d M1 – 1,08,000 M2 – 47,500 1,55,500 1,70,000 1,70,000 2011 2012 April 01 Balance B/d Mar.31 Depreciation A/c M1 – 1,08,000 M1 – 12,000 M2 – 47,500 1,55,500 M2 – 5,000 (WN4) M3-1,875 18,875 July 01 Bank A/c (M3) 25,000 Mar.31 Balance c/d 2012 M1 – 96,000 M2 – 42,500 M3 – 23,125 1,61,625 1,80,500 1,80,500 2012 2013 Mar.31 Balance B/d Jan 1 Depreciation A/c (WN5) 1,500 M1 – 96,000 Jan 1 Bank A/c (M1) 6,000 M2 – 42,500 Jan 1 Profit and loss A/c (Loss) 8,500 M3 – 23,125 1,61,625 Mar.31 Depreciation A/c M1– 10,000 M2 – 5,000 M3 – 2,500 17,500 Mar.31 Balance c/d M1 – 70,000 M2 – 37,500 M3 – 20,625 1,28,125 1,61,625 1,61,625

Working notes:

WN 1: Annual depreciation @10% p. a.

Machinery 1 – 12,000 of 1,20,000

Machinery 2 – 5,000 of 50,000

Machinery 3 – 2,500 of 25,000

WN 2: First year depreciation @10% p. a.

Machinery 1 – 12,000 of 1,20,000

Machinery 2 – 5,000 of 50,000 for 6 month is 2,500

WN3: Depreciation (for 2nd Machinery)

(For 6 months) M2 – 2,500

Calculated as below

(1,20,000 ×10×6)÷(100×12) =2,500

WN4: Depreciation (for 3rd Machinery)

(For 9 months) M3 -1,875

Calculated as below

(50,000 ×10×9)÷(100×12) =1,875

WN5: Depreciation (for 1st machinery sold at time of sale)

(For Machinery, cost of 20,000 for 3 months)

Calculated as below

(25,000 ×10×3)÷(100×12) =1,500