# 11th | chapter:15 | Depreciation | Question No. 21 to 24 | Ts grewal Solution 2022-2023

#### Answer:

I. Calculation of Depreciation from April 01, 2019 to March 31, 2022

Depreciation Rate: 10% p.a. on Diminishing Balance Method

 Year Machinery Date of Purchase Value No. of Months Amt. of Dep. Total Dep. March 31, 2020 M1 April 01, 2019 20,000 12 2,000 2,000 March 31, 2021 M1 April 01, 2019 18,000 (20,000 – 2,000) 12 1,800 M2 Oct. 01,2020 10,000 6 500 2,300 March 31, 2022 M1 April 01, 2021 16,200 (18,000 – 1,800) 12 1,620 M2 Oct. 01,2020 9,500 12 950 M3 April 01, 2021 5,000 12 500 3,070

II. Balance in Machinery Account as on March 31, 2022 will be Rs. 27,630

Working Notes: Preparation of Machinery Account

 Machinery Account Dr. Cr. Date Particulars ( `) Date Particulars ( `) 2019 2020 April 01 Bank A/c (M1) 20,000 March 31 Depreciation A/c (M1) 2,000 March 31 Balance c/d (M1) 18,000 20,000 20,000 2020 2021 April 01 Balance b/d (M1) 18,000 March 31 Depreciation A/c Oct. 01 Bank A/c (M2) 10,000 M1(10,000×10×6/100/12) *1,800 M2 500 2,300 March 31 Balance c/d M1 16,200 M2 9,500 25,700 28,000 28,000 2021 2022 April 01 Balance b/d March 31 Depreciation A/c M1 16,200 M1 1,620 M2 9,500 25,700 M2 950 April 01 Bank A/c (M3) 5,000 M3 500 3,070 March 31 Balance c/d M1 14,580 M2 8,550 M3 4,500 27,630 30,700 30,700

Note: Since the question does not specify to prepare the Machinery Account, thus, it is optional to prepare this account.

#### Question 22:

M/s. P & Q purchased machinery for  ` 40,000 on 1st October, 2018. Depreciation is provided @ 10% p.a. on the Diminishing Balance. On 31st January, 2021, one-fourth of the machinery was found unsuitable and disposed off for  ` 5,600. On the same date new machinery at a cost of  ` 15,000 was purchased. Write up the Machinery account for the years ended 31st March, 2019, 2020 and 2022. Accounts are closed on 31st March each year.

#### Answer:

 Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2018 2019 Oct. 01 Bank Mar.31 Depreciation I (3/4) 30,000 I (3/4) for 6 months 1,500 I(1/4) 10,000 40,000 I (1/4) for 6 months 500 2,000 Mar.31 Balance c/d I (3/4) 28,500 I (1/4) 9,500 38,000 40,000 40,000 2019 2020 Apr.01 Balance b/d Mar.31 Depreciation I (3/4) 28,500 I (3/4) 2,850 I (1/4) 9,500 38,000 I (1/4) 950 3,800 Mar.31 Balance c/d I (3/4) 25,650 I (1/4) 8,550 34,200 38,000 38,000 2020 2021 Apr.01 Balance b/d Jan.31 Depreciation I (1/4)(for 10 Months) 713 I (3/4) 25,650 Jan.31 Bank I(1/4) 5,600 2021 I (1/4) 8,550 34,200 Profit and Loss (Loss) 2,237 Jan.31 Bank (II) 15,000 2021 Mar.31 Depreciation I (3/4) 2,565 II (for 2 months) 250 2,815 Mar.31 Balance c/d I (3/4) 23,085 II 14,750 37,835 49,200 49,200

Working Note

(1)Calculation of Profit or Loss on Sale of Machine I (1/4):

 Particulars ( `) Book Value of Machine (I)(1/4) on Apr. 01, 2020 8,550 Less: Depreciation for 10 Months (713) Book Value of Machine (I)(1/4) on Jan. 31 2021 7,837 Less: Sale Value (5,600) Loss on Sale of Machine I(1/4) 2,237

Question 23:

On 1st October, 2018, Meenal Sharma bought a machine for  ` 25,000 on which he spent  ` 5,000 for carriage and freight;  ` 1,000 for brokerage of the middle-man,  ` 4,000 for installation. The machine is depreciated @ 10% p.a. on written down value basis. On 31st March, 2021 the machine was sold to Deepa for  ` 30,500 and  ` 500 was paid as commission to broker through whom the sales was effected. Find out the profit or loss on sale of machine if accounts are closed on 31st March, every year.

#### Answer:

 Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2018 2019 Oct 01 Bank (25,000+5,000+1,000+4,000) 35,000 Mar.31 Depreciation (for 6 months) 1,750 Mar.31 Balance c/d 33,250 35,000 35,000 2019 2020 Apr.01 Balance b/d 33,250 Mar.31 Depreciation 3,325 Mar.31 Balance c/d 29,925 33,250 33,250 2020 2021 Apr.01 Balance b/d 29,925 Mar.31 Depreciation 2,993 2021 Mar.31 Profit and Loss A/c (Profit on Sale) (WN1) 3,068 Mar.31 Bank A/c (30,500 – 500) 30,000 32,993 32,993

Working Note:

(1) Calculation of Profit or Loss on sale of Machine I:

 Particulars ( `) Book Value of Machine on Apr. 01, 2020 29,925 Less: Depreciation for the year (2,993) Book Value of Machine I on Mar. 31, 2021 26,932 Less: Sale Value (30,500 – 500) (30,000) Profit on Sale 3,068

#### Question 24:

A company purchased on 1st July, 2015 machinery costing  ` 30,000. It further purchased machinery on 1st January, 2016 costing  ` 20,000 and on 1st October, 2016 costing  ` 10,000. On 1st April, 2017, one-third of the machinery installed on 1st July, 2015 became obsolete and was sold for  ` 3,000. The company follows financial year as accounting year.
Show how the Machinery Account would appear in the books of company if depreciation is charged @ 10% p.a. on Written Down Value Method.

#### Answer:

 Machinery Account Dr. Cr. Date Particulars J.F. (Rs) Date Particulars J.F. (Rs) 2018 2019 July 01 Bank Mar.31 Depreciation I(2/3) 20,000 I(2/3) 1,500 2019 I(1/3) 10,000 30,000 I(1/3) 750 Jan.01 Bank (II) 20,000 II 500 2,750 Mar.31 Balance c/d I(2/3) 18,500 I(1/3) 9,250 II 19,500 47,250 50,000 50,000 2019 2020 Apr 01 Balance b/d Mar 31 Depreciation I(2/3) 18,500 I(2/3) 1,850 I(1/3) 9,250 I(1/3) 925 II 19,500 47,250 II 1,950 Oct 01 Bank (III) 10,000 III 500 5,225 Mar 31 Balance c/d I(2/3) 16,650 I(1/3) 8,325 II 17,550 III 9,500 52,025 57,250 57,250 2020 2020 Apr.01 Balance b/d Apr.01 Bank (I)(1/3) 3,000 I(2/3) 16,650 Apr.01 Profit and Loss (Loss) 5,325 I(1/3) 8,325 Mar.31, Depreciation II 17,550 2021 I(2/3) 1,665 III 9,500 52,025 II 1,755 III 950 4,370 Mar.31 Balance c/d I(2/3) 14,985 II 15,795 III 8,550 39,330 52,025 52,025

Working Note:

(1) Calculation of Profit or Loss on Sale of Plant I(1/3):

 Particulars (Rs) Book Value of Plant I (1/3) as on Apr 01, 2020 8,325 Less: Sale Value (3,000) Loss on Sale 5,325