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Page No 14.40:

Question 1:

Calculate the 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.

Answer:

Amount of Depreciation=Cost of MachineScrap Value of Machine Life in Years                                       =1,20,00072,0004=Rs 12,000Rate of Depreciation=Amount of DepreciationCost of Machine×100                                  =12,0001,20,000×100=10%p.a.

Page No 14.40:

Answer:

Book of X Ltd.

Machinery Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

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

2015

 

 

 

2016

 

 

 

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

2016

 

 

 

2017

 

 

 

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                              =Rs 40,000 p.a.



Page No 14.41:

Answer:

Furniture Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2012

 

 

 

2013

 

 

 

April 01

Bank (F1)

 

55,000

March 31

Depreciation (F1)

 

5,000

 

 

 

 

March 31

Balance c/d (F1)

 

50,000

 

 

 

55,000

 

 

 

55,000

2013

 

 

 

2014

 

 

 

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

2014

 

 

 

2015

 

 

 

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

2015

 

 

 

2016

 

 

 

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:

Page No 14.41:

Question 4:

On 1st April, 2014, A Ltd. purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st October, 2014 an additional machinery costing ₹ 1,00,000 was purchased. On 1st October, 2016, the machine purchased on 1st April, 2014 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased ata cost of ₹ 2,00,000.

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

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

2015

 

 

 

2016

 

 

 

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

2016

 

 

 

2016

 

 

 

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

          2017      

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

2017

 

 

 

2018

 

 

 

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  

2. Calculation of profit or loss on sale of Machine 1

Particulars

Amount

(Rs)

Book Value on April 01, 2016

2,25,000

Less: Deprecation for six month

(6,250)

Book Value on Oct. 01, 2016

2,18,750

Less: Sale Proceeds

(1,43,000)

Loss on Sale of Machine

75,750

 

Page No 14.41:

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particular

J.F.

Amount

(Rs)

2016

 

 

 

2017

 

 

 

Apr.01

Bank (M1)

 

50,000

Mar.31

Depreciation

 

 

Sept 30

Bank (M2)

 

20,000

 

M1

5,000

 

 

 

 

 

 

 

M2 (6 months)

1,000

 

6,000

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

M1

45,000

 

 

 

 

 

 

 

M2 (6 months)

19,000

 

64,000

 

 

 

70,000

 

 

 

70,000

 

 

 

 

 

 

 

 

Note: 

Repair and renewal made on December 31, 2016 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.

Page No 14.41:

Answer:

Asset Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2009

 

 

 

2010

 

 

 

April 01

Bank

 

10,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

9,500

 

 

 

10,500

 

 

 

10,500

2010

 

 

 

2011

 

 

 

April 01

Balance b/d

 

9,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

8,500

 

 

 

9,500

 

 

 

9,500

2011

 

 

 

2012

 

 

 

April 01

Balance b/d

 

8,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

7,500

 

 

 

8,500

 

 

 

8,500

2012

 

 

 

2013

 

 

 

April 01

Balance b/d

 

7,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

6,500

 

 

 

7,500

 

 

 

7,500

2013

 

 

 

2014

 

 

 

April 01

Balance b/d

 

6,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

5,500

 

 

 

6,500

 

 

 

6,500

2014

 

 

 

2015

 

 

 

April 01

Balance b/d

 

5,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

4,500

 

 

 

5,500

 

 

 

5,500

2015

 

 

 

2016

 

 

 

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, 2010 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2014 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2016 is Rs 2,900

Page No 14.41:

Answer:

Books of Modern Ltd.

Machinery Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2013

 

 

 

2014

 

 

 

Aug.01

Bank (M1)

 

60,000

March 31

Depreciation

 

 

 

 

 

 

 

M1 (for 8 months)

 

8,000

 

 

 

 

March 31

Balance c/d

 

52,000

 

 

 

60,000

 

 

 

60,000

2014

 

 

 

2015

 

 

 

April 01

Balance b/d

 

52,000

March 31

Depreciation

 

 

Oct. 01

Bank (M2)

 

20,000

 

M1

12,000

 

 

 

 

 

 

 

M2 (6 months)

2,000

 

14,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M1

40,000

 

 

 

 

 

 

 

M2

18,000

 

58,000

 

 

 

72,000

 

 

 

72,000

2015

 

 

 

2015

 

 

 

April 01

Balance b/d

 

 

June 30

Depreciation (M1) (for 3 months)

 

3,000

 

M1

40,000

 

 

June 30

Bank (M1)

 

38,500

 

M2

18,000

 

58,000

2016

 

 

 

June 30 Profit and Loss (profit)   1,500 Mar.31 Depreciation (M2)   4,000

 

 

 

 

Mar.31

Balance c/d

 

14,000

 

 

 

59,500

 

 

 

59,500

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Annual Depreciation

Particulars

Amount

(Rs)

Value on Apr 01, 2015

40,000

Depreciation for 3 Months

(3,000)

Value on June 30, 2015

37,000

Less: Sale of Machine

(38,500)

Profit on sale of Machine 1

1,500

Page No 14.41:

Answer:

Books of Sohan Lal & Sons

Plant Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

July 01

Bank (I)

 

60,000

March 31

Depreciation

 

 

 

 

 

 

 

(I) for 9 months

4,500

 

 

2016

 

 

 

 

(II) for 3 months

1,000

 

5,500

Jan. 01

Bank (II)

 

40,000

March 31

Balance c/d

 

 

 

 

 

 

 

(I)

55,500

 

 

 

 

 

 

 

(II)

39,000

 

94,500

 

 

 

1,00,000

 

 

 

1,00,000

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

(I)

55,500

 

 

 

(I)

6,000

 

 

 

(II)

39,000

 

94,500

 

(II)

4,000

 

 

Oct. 01

Bank (III)

 

20,000

 

(III) for 6 months

1,000

 

11,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

(I)

49,500

 

 

 

 

 

 

 

(II)

35,000

 

 

 

 

 

 

 

(III)

19,000

 

1,03,500

 

 

 

1,14,500

 

 

 

1,14,500

2017

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

April 01

Bank

 

6,000

 

(I)

49,500

 

 

April 01

Profit and Loss (loss)(16,500 – 6,000)

 

10,500

          2018      

 

(II)

35,000

 

 

March 31

Depreciation

 

 

 

(III)

19,000

 

1,03,500

 

(I)

4,000

 

 

 

 

 

 

 

(II)

4,000

 

 

 

 

 

 

 

(III)

2,000

 

10,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

(I)

29,000

 

 

 

 

 

 

 

(II)

31,000

 

 

 

 

 

 

 

(III)

17,000

 

77,000

 

 

 

1,03,500

 

 

 

1,03,500

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Depreciation

2. Calculation of profit or loss on Sale of Plant I

Particulars

Amount

(Rs)

1/3rd of Book Value of Plant I as on April 01, 2017( 49,500 × 1/3)

16,500

Less: Sale of Plant

(6,000)

Loss on Sale of Plant

10,500

 



Page No 14.42:

Question 9:

A Van was purchased on 1st April, 2015 for ₹ 60,000 and ₹ 5,000 was spent on its repair and registration. On 1st October, 2016 another van was purchased for ₹ 70,000. On 1st April, 2017, the first van purchased on 1st April, 2015 was sold for ₹ 45,000 and a new van costing ₹ 1,70,000 was purchased on the same date. Show the Van Account from 2015-16 to 2017-18 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.

Answer:

Van Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

April 01

Bank (I)

 

65,000

March 31

Depreciation (I)

 

6,500

 

 

 

 

March 31

Balance c/d (I)

 

58,500

 

 

 

65,000

 

 

 

65,000

2016

 

 

 

2017

 

 

 

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

2017

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

April 01

Bank (I)

 

45,000

 

(I)

52,000

 

 

April 01

Profit and Loss (Loss on Sale)

 

7,000

          2018      

 

(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

2. Calculation of profit or loss on sale of Van (I)

 

Particulars

Amount

(Rs)

Book Value on Apr. 01, 2017

52,000

Less: Sale of Van

(45,000)

Loss on Sale of Van

7,000

Page No 14.42:

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2013

 

 

 

2014

 

 

 

July 01

Bank (I)

 

30,000

March 31

Depreciation

 

 

2014              

Jan. 01

Bank (II)

 

20,000

 

I (for 9 months)

2,250

 

 

 

 

 

 

 

II

500

 

2,750

 

 

 

 

March 31

Balanced c/d

 

 

 

 

 

 

 

I

27,750

 

 

 

 

 

 

 

II

19,500

 

47,250

 

 

 

50,000

 

 

 

50,000

2014

 

 

 

2015

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

I

27,750

 

 

 

I

3,000

 

 

 

II

19,500

 

47,250

 

II

2,000

 

 

 

 

 

 

 

III

500

 

5,500

Oct. 01

Bank (III)

 

10,000

March 31

Balance c/d

 

 

 

 

 

 

 

I

24,750

 

 

 

 

 

 

 

II

17,500

 

 

 

 

 

 

 

III

9,500

 

51,750

 

 

 

57,250

 

 

 

57,250

2015

 

 

 

2015

 

 

 

April 01

Balance b/d

 

 

April 01

Bank I(1/3rd portion)

 

3,000

 

I

24,750

 

 

April 01

Profit and Loss (Loss on Sale of I)

 

5,250

          2016      

 

II

17,500

 

 

March 31

Depreciation

 

 

 

III

9,500

 

51,750

 

I (on 2/3rd portion)

2,000

 

 

 

 

 

 

 

II

2,000

 

 

 

 

 

 

 

III

1,000

 

5,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

I (on 2/3rd portion)

14,500

 

 

 

 

 

 

 

II

15,500

 

 

 

 

 

 

 

III

8,500

 

38,500

 

 

 

51,750

 

 

 

51,750

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Depreciation

 

Calculation of profit or loss on sale of 1/3rd Portion of Machine I

Particulars

Amount (Rs)

Book Value of 1/3rd portion of Machine I on April 01, 2015 (24,750 × 1/3)

8,250

Less: Sale Value

(3,000)

Loss on sale

5,250

 

Page No 14.42:

Answer:

Books of A. Co. Ltd

Machinery

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2012

 

 

 

2013

 

 

 

July 01

Bank (I) (20,000 + 3,000)

 

23,000

Mar.31

Depreciation

 

 

2013

 

 

 

 

I (for 9 months)

1,725

 

 

Jan.01

Bank (II)

 

12,000

 

II (for 3 months)

300

 

2,025

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

I

21,275

 

 

 

 

 

 

 

II

11,700

 

32,975

 

 

 

35,000

 

 

 

35,000

2013

 

 

 

2014

 

 

 

April 01

Balance b/d

 

 

Mar.31

Depreciation

 

 

 

I

21,275

 

 

 

I

2,300

 

 

 

II

11,700

 

32,975

 

II

1,200

 

3,500

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

I

18,975

 

 

 

 

 

 

 

II

10,500

 

29,475

 

 

 

32,975

 

 

 

32,975

2014

 

 

 

2014

 

 

 

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

2015

 

 

 

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

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

 

Particulars

Amount (Rs)

Book Value of Machine (II) on April 01, 2014

10,500

Less: Depreciation for 3 Months

(300)

Book Value on June 30

10,200

Less: Sale

(8,000)

Loss on Sale

2,200

Page No 14.42:

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2011

 

 

 

2012

 

 

 

April 01

Bank (I)

 

1,60,000

Mar.31

Depreciation

 

 

Oct.01

Bank (II)

 

80,000

 

I

16,000

 

 

 

 

 

 

 

II

4,000

 

20,000

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

I

1,44,000

 

 

 

 

 

 

 

II

76,000

 

2,20,000

 

 

 

2,40,000

 

 

 

2,40,000

2012