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

#### Question 5:

An asset was purchased for ` 10,500 on 1st April, 2014. The scrap value was estimated to be ` 500 at the end of asset's 10 years' life. Straight Line Method of depreciation was used. The accounting year ends on 31st March every year. The asset was sold for ` 600 on 31st March, 2021. Calculate the following.
(i) The Depreciation expense for the year ended 31st March, 2015.
(ii) The net book value of the asset on 31st March, 2019.
(iii) The gain or loss on sale of the asset on 31st March, 2021.

 Asset Account Dr. Cr. Date Particulars J.F. Amount ( `) Date Particulars J.F. Amount ( `) 2014 2015 April 01 Bank 10,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 9,500 10,500 10,500 2015 2016 April 01 Balance b/d 9,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 8,500 9,500 9,500 2016 2017 April 01 Balance b/d 8,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 7,500 8,500 8,500 2017 2018 April 01 Balance b/d 7,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 6,500 7,500 7,500 2018 2019 April 01 Balance b/d 6,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 5,500 6,500 6,500 2019 2020 April 01 Balance b/d 5,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 4,500 5,500 5,500 2020 2021 April 01 Balance b/d 4,500 Mar.31 Depreciation 1,000 Mar.31 Bank 600 Mar.31 Profit and Loss (Loss) 2,900 4,500 4,500

(i) Depreciation Expense for the year ended March 31, 2015 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2019 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2021 is Rs 2,900

#### Question 6:

On 1st April, 2017, Star Ltd. purchased 5 machines for  ` 60,000 each. On 1st April, 2019, one of the machine was sold at a loss of  ` 8,000. On 1st July, 2020, second machine was sold at a loss of  ` 12,500. A new machine was purchased for  ` 1,00,000 on 1st October, 2020.
Prepare Machinery Account for 4 years, assuming accounts are closed on 31st March each year and depreciation is charged @ 10% per annum as per Straight Line Method.

 Dr. Machinery A/c Cr. Date Particulars Amount ( `) Date Particulars Amount ( `) 2017 2018 April 01 To Cash/Bank A/c (60,000 × 5) 3,00,000 March 31 By Depreciation A/c (3,00,000 × 10/100) 30,000 March 31 By balance c/d 2,70,000 3,00,000 3,00,000 2018 2019 April 01 To balance b/d 2,70,000 March 31 By Depreciation A/c (3,00,000 × 10/100) 30,000 March 31 By balance c/d 2,40,000 2,70,000 2,70,000 2019 2019 April 01 To balance b/d 2,40,000 April 01 By Bank A/c (WN1) 40,000 April 01 By Profit & Loss A/c (Loss on sale) 8,000 2020 March 31 By Depreciation A/c (2,40,000 × 10/100) 24,000 (On remaining machinery) March 31 By balance c/d 1,68,000 2,40,000 2,40,000 2020 2020 April 01 To balance c/d 1,68,000 July 1 By Depreciation A/c (6,000 × 3/12) 1,500 Oct.01 To Cash/Bank A/c 1,00,000 July 1 By Bank A/c (WN2) 28,000 July 1 By Profit & Loss A/c (Loss on Sale) 12,500 2021 March 31 By Depreciation A/c (On remaining 23,000 Machinery) [(1,80,000 × 10/100) + (1,00,000 × 10/100 × 6/12)] March 31 By balance c/d 2,03,000 2,68,000 2,68,000

Working Notes:

 1) Calculation of Sale proceeds from Machinery sold on 1st April, 2019 Book Value of the Machine as on 1st April, 2019 = (Total opening balance of Machinery on this date/5) = ` (2,40,000/5) =  ` 48,000 Loss on Sale of Machinery = ` 8,000 Sale proceeds from the Machinery = Book Value of the Machine as on 1st April, 2019 – Loss on Sale = ` (48,000 – 8,000) =  ` 40,000 2) Calculation of Sale proceeds from Machinery sold on 1st July 2020 Book Value of the Machine as on 1st July, 2020 = [(Total opening balance of Machinery on this date/4-Depreciation] = ` [(1,68,000/4) – 1,500] =  ` 40,500 Loss on Sale of Machinery = ` 12,500 Sale proceeds from the Machinery = Book Value of the Machine as on 1st July, 2020 – Loss on Sale = ` (40,500 – 12,500) =  ` 28,000

#### Question 7:

On 1st April, 2017, A Ltd. purchased a machine for  ` 2,40,000 and spent  ` 10,000 on its erection. On 1st October, 2017 an additional machinery costing  ` 1,00,000 was purchased. On 1st October, 2019, the machine purchased on 1st April, 2017 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. Amount ( `) Date Particulars J.F. Amount ( `) 2017 2018 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 2018 2019 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 2019 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 2019 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 2020 2021 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 1

 Particulars Amount ( `) Book Value on April 01, 2019 2,25,000 Less: Deprecation for six month (6,250) Book Value on Oct. 01, 2019 2,18,750 Less: Sale Proceeds (1,43,000) Loss on Sale of Machine 75,750

#### Question 8:

A Van was purchased on 1st April, 2018 for  ` 60,000 and  ` 5,000 was spent on its repair and registration. On 1st October, 2019 another van was purchased for  ` 70,000. On 1st April, 2020, the first van purchased on 1st April, 2018 was sold for  ` 45,000 and a new van costing  ` 1,70,000 was purchased on the same date. Show the Van Account from 2018-17 to 2020-19 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. Amount ( `) Date Particulars J.F. Amount ( `) 2018 2019 April 01 Bank (I) 65,000 March 31 Depreciation (I) 6,500 March 31 Balance c/d (I) 58,500 65,000 65,000 2019 2020 April 01 Balance b/d (I) 58,500 March 31 Depreciation Oct. 01 Bank (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 2020 2021 April 01 Balance b/d April 01 Bank (I) 45,000 (I) 52,000 April 01 Profit and Loss (Loss on Sale) 7,000 2020 (II) 66,500 1,18,500 March 31 Depreciation April 01 Bank (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 Amount ( `) Book Value on Apr. 01, 2020 52,000 Less: Sale of Van (45,000) Loss on Sale of Van 7,000