# 11th | chapter:15 | Depreciation | Question No. 13 to 16 | Ts grewal Solution 2022-2023

#### Question 13:

On 1st July, 2017, A Co. Ltd. purchases second-hand machinery for  ` 20,000 and spends  ` 3,000 on reconditioning and installing it. On 1st January, 2018, the firm purchases new machinery worth  ` 12,000. On 30th June, 2019, the machinery purchased on 1st January, 2016, was sold for  ` 8,000 and on 1st July, 2019, a fresh plant was installed.
Payments for this plant was to be made as follows:

 1st July, 2019 ` 5,000 30th June, 2020 ` 6,000 30th June, 2021 ` 5,500

Payments in 2020 and 2021 include interest of  ` 1,000 and  ` 500 respectively.
The company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March. Show the Machinery Account for the year ended 31st March, 2020.

#### Machinery A/c

Date

Particulars

J.F.

( `)

Date

Particulars

J.F.

( `)

2018

2017

Mar.31

Depreciation

July 01

Bank (I)

(20,000 + 3,000)

23,000

I (for 9 months)

1,725

2017

II (for 3 months)

300

2,025

Jan.01

Bank (II)

12,000

Mar.31

Balance c/d

I

21,275

II

11,700

32,975

35,000

35,000

2018

April 01

Balance b/d

2019

I

21,275

Mar.31

Depreciation

II

11,700

32,975

I

2,300

II

1,200

3,500

Mar.31

Balance c/d

I

18,975

II

10,500

29,475

32,975

32,975

2019

2019

April 01

Balance b/d

June 30

Bank (II)

8,000

I

18,975

June 30

Depreciation (II)

(for 3 months)

300

II

10,500

29,475

June 30

Profit and Loss (Loss)

2,200

July 01

Bank (III)

5,000

2020

July 01

Creditors for plant (III)

10,000

Mar.31

Depreciation

I

2,300

III (on 15,000 for 8 months)

1,125

3,425

Balance c/d

I

16,675

III

13,875

30,550

44,475

44,475

Working Notes

1. Calculation of Depreciation

Machine I= 23,000×10/100=  ` 2,300 p.a.

Machine II=12,000×10/100=  ` 1,200 p.a.

Machine III=15,000×10/100=  ` 1,500 p.a.

2.     Calculation of profit on loss on sale of Machine (II)

 Particulars (Rs) Book Value of Machine (II) on April 01, 2017 10,500 Less: Depreciation for 3 Months (300) Book Value on June 30 10,200 Less: Sale (8,000) Loss on Sale 2,200

#### Question 14:

Following balances appear in the books of Hari Bros:

 ` 1st April, 2020 Machinery A/c 80,000 Provision for Depreciation A/c 36,000

On 1st April, 2020, they decided to sell a machine for  ` 8,700. This machine was purchased for  ` 16,000 in April, 2016. Prepare the Provision for Depreciation Account and Machinery Account on 31st March, 2021, assuming the firm has been charging Depreciation at 10% p.a. on Straight Line Method.

 Books of Rama Bros. Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 Apr.01 Balance b/d (64,000 + 16,000) 80,000 Apr.01 Provision for Depreciation 6,400 Apr.01 Bank 8,700 Apr.01 Profit and Loss 900 2021 Mar.31 Balance c/d 64,000 80,000 80,000

 Provision for Depreciation Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 Apr.01 Machinery Account (Accumulated Dep. on Machine Sold) 6,400 Apr.01 Balance b/d 36,000 2021 Mar.31 Balance c/d 36,000 2021 Mar.31 Depreciation (on 64,000 @10%) 6,400 42,400 42,400

Working Notes

(1) Calculation of Book Value of Machine Sold on April 01, 2020

 Particulars ( `) Machine purchased in 2016 16,000 Less: Accumulate Depreciation for 4 years till Mar 31, 2020 (1,600 × 4) (6,400) Book value on April 01, 2020 9,600

(2)Calculation of profit or loss on Sale of Machine

 Particulars ( `) Book Value on April 01, 2020 9,600 Less: Sale Value (8,700) Loss on Sale of Machine 900

#### Following balances appear in the books of Priyank Brothers:

 ` 1st April, 2020 Machinery A/c 20,00,000 Provision for Depreciation A/c 8,00,000

On 1st April, 2020, they decide to sell a machine for ` 5,00,000. This machine was purchased for `7,50,000 on 1st April, 2017. Prepare the Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2021 assuming that the firm has been charging Depreciation @ 10% p.a. on the Straight Line Method.

 Books of Priyank Brothers Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 April 01 Balance b/d 20,00,000 April 01 Provision for Depreciation 2,25,000 April 01 Bank 5,00,000 April 01 Profit and Loss (Loss) 25,000 2021 Mar.31 Balance c/d 12,50,000 20,00,000 20,00,000

 Provision for Depreciation Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 April 01 Machinery 2,25,000 April 01 Balance b/d 8,00,000 2021 2021 Mar.31 Balance c/d 7,00,000 Mar.31 Depreciation (for the year) 1,25,000 9,25,000 9,25,000

Working Notes

1 Calculation of Loss on Sale of Machinery

 Particulars ( `) Original cost of Machine Sold 7,50,000 Less: Accumulated Depreciation on Machine Sold,  for 3 years, (7,50,000 × 10%  × 3 years) (2,25,000) Book Value of Machine Sold 5,25,000 Less: Sale Value (5,00,000) Loss on Sale of Machine 25,000

Question 16:

A boiler was purchased from abroad for `10,000. Shipping and forwarding charges ` 2,000, Import duty  ` 7,000 and expenses of installation amounted to  ` 1,000.
Calculate the Depreciation for the first three years (separately for each year) @ 10% p.a. on Diminishing Balance Method.