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

#### Question 17:

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.

 Boiler Account Dr. Cr. Date Particulars J.F. Amount ( `) Date Particulars J.F. Amount ( `) I year I year Jan.01 Bank (10,000 + 2,000 + 7,000 + 1,000) 20,000 Dec.31 Depreciation 2,000 Balance c/d 18,000 20,000 20,000 II year II year Jan.01 Balance b/d 18,000 Dec.31 Depreciation 1,800 Dec.31 Balance c/d 16,200 18,000 18,000 III year III year Jan.01 Balance b/d 16,200 Dec.31 Depreciation 1,620 Dec.31 Balance c/d 14,580 16,200 16,200

#### The original cost of furniture amounted to `4,000 and it is decided to write off 5% on the original cost as Depreciation at the end of each year. Show the Ledger Account as it will appear during the first four years. Show also how the same account will appear if it was decided to write off 5% p.a. on the diminishing balance of the asset each year.

 Furniture Account (Original Cost Method) Dr. Cr. Date Particulars J.F. Amount ( `) Date Particulars J.F. Amount ( `) I year I year Jan.01 Bank 4,000 Dec.31 Depreciation 200 Dec.31 Balance c/d 3,800 4,000 4,000 II year II year Jan.01 Balance b/d 3,800 Dec.31 Depreciation 200 Dec.31 Balance c/d 3,600 3,800 3,800 III year III year Jan.01 Balance b/d 3,600 Dec.31 Depreciation 200 Dec.31 Balance c/d 3,400 3,600 3,600 IV year IV year Jan.01 Balance b/d 3,400 Dec.31 Depreciation 200 Dec.31 Balance c/d 3,200 3,400 3,400

Note: Depreciation 4,000×5/100=  ` 200 p.a.

 Furniture Account (Diminishing Balance Method) Dr. Cr. Date Particulars J.F. Amount ( `) Date Particulars J.F. Amount ( `) I year I year Jan.01 Bank 4,000 Dec.31 Depreciation 200 Dec.31 Balance c/d 3,800 4,000 4,000 II year II year Jan.01 Balance b/d 3,800 Dec.31 Depreciation 190 Dec.31 Balance c/d 3,610 3,800 3,800 III year III year Jan.01 Balance b/d 3,610 Dec.31 Depreciation 181 Dec.31 Balance c/d 3,429 3,610 3,610 IV year IV year Jan.01 Balance b/d 3,429 Dec.31 Depreciation 171 Dec.31 Balance c/d 3,258 3,429 3,429

Note: Depreciation is calculated on opening balance every year By using below formula

Depreciation p.a.= Opening Balance ×5/100

#### Question 19:

Babu purchased on 1st April, 2019, a machine for  ` 6,000. On 1st October, 2019, he also purchased another machine for  ` 5,000. On 1st October, 2020, he sold the machine purchased on 1st April, 2019 for  ` 4,000.
It was decided that Depreciation @ 10% p.a. was to be written off every year under Diminishing Balance Method.
Assuming the accounts were closed on 31st March every year, show the Machinery Account for the years ended 31st March, 2020 and 2021.

 Books of Babu Machinery Account Dr. Cr. Date Particulars J.F. Amount ( `) Date Particulars J.F. Amount ( `) 2019 2020 Apr. 01 Bank (I) 6,000 Mar. 31 Depreciation Oct. 01 Bank (II) 5,000 I 600 II (for 6 months) 250 850 Mar. 31 Balance c/d I 5,400 II 4,750 10,150 11,000 11,000 2020 2020 Apr. 01 Balance b/d Oct. 01 Depreciation (I) (for 6 months) 270 I 5,400 Oct. 01 Bank (I) 4,000 II 4,750 10,150 Oct. 01 Profit and Loss (Loss) 1,130 2021 Mar. 31 Depreciation (II) 475 Mar. 31 Balance c/d (II) 4,275 10,150 10,150

Working Note

(1) Calculation of profit or loss on sale of machine:

 Particulars Amount ( `) Book Value of Machinery Apr. 01, 2020 5,400 Less: Depreciation (for 6 Months) (270) Book Value of Machinery on Oct. 01 2020 5,130 Less: Sale (4,000) Loss on Sale 1,130

#### Question 20:

X bought a machine for  ` 25,000 on which he spent  ` 5,000 for carriage and freight.  ` 1,000 for brokerage of the middleman,  ` 3,500 for installation and  ` 500 for an iron pad. The machine is depreciated @ 10% p.a. on Written Down Value basis. After three years, the machine was sold to Y for  ` 30,500 and  ` 500 was paid as commission to the broker through whom the sale was effected. Find out the profit and loss on sale of machine.