# Double Entry Book Keeping Ts Grewal 2021 for Class 11 Commerce Accountancy Chapter 15 - Depreciation

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#### Question 1:

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.

#### On 1st April, 2018, 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. Amount ( `) Date Particulars J.F. Amount ( `) 2018 2019 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 2019 2020 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 2020 2021 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.

#### Question 3:

On 1st April, 2017, furniture costing  ` 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for  ` 5,000. Additions are made on 1st April 2018 and 1st October, 2020 to the value of  ` 9,500 and  ` 8,400 (Residual values  ` 500 and  ` 400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight Line Method.

 Furniture Account Dr. Cr. Date Particulars J.F. Amount ( `) Date Particulars J.F. Amount ( `) 2017 2018 April 01 Bank (F1) 55,000 March 31 Depreciation (F1) 5,000 March 31 Balance c/d (F1) 50,000 55,000 55,000 2018 2019 April 01 Balance b/d (F1) 50,000 March 31 Depreciation April 01 Bank (F2) 9,500 F1 5,000 F2 900 5,900 March 31 Balance c/d F1 45,000 F2 8,600 53,600 59,500 59,500 2019 2020 April 01 Balance b/d March 31 Depreciation F1 45,000 F1 5,000 F2 8,600 53,600 F2 900 5,900 March 31 Balance c/d F1 40,000 F2 7,700 47,700 53,600 53,600 2020 2021 April 01 Balance b/d March 31 Depreciation F1 40,000 F1 5,000 F2 7,700 47,700 F2 900 Oct. 01 Bank (F3) 8,400 F3 400 6,300 March 31 Balance c/d F1 35,000 F2 6,800 F3 8,000 49,800 56,100 56,100

Working Notes:

Drepreciation on Furniture 1=55,000-5,000(Scrap Value)/10 Year=  `5,000 p.a.

Drepreciation on Furniture 2=9,500-500(Scrap Value)/10 Year=  `900 p.a.

Drepreciation on Furniture 3=8,400-400(Scrap Value)/10 Year=  `800 p.a.

Depreciation on Furniture(for 6 Month)=800×6/12= `400

#### Question 4:

From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2021:

 1st April, 2020 : Purchased a second-hand machinery for  ` 40,000 1st April, 2020 : Spent `10,000 on repairs for making it serviceable. 30th September, 2020 : Purchased additional new machinery for ` 20,000. 31st December, 2020 : Repairs and renewal of machinery ` 3,000. 31st March, 2021 : Depreciate the machinery at 10% p.a.