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#### Question 1:

Calculate the Rate of Depreciation under Straight Line Method (SLM) from the following:
Purchased a second-hand machine for â‚¹ 96,000, spent â‚¹ 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value â‚¹ 72,000.

#### Question 2:

On 1st April, 2015, X Ltd. purchased a machine costing â‚¹ 4,00,000 and spent â‚¹ 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be â‚¹ 50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for t he 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 (Rs) Date Particulars J.F. Amount (Rs) 2015 2016 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 2016 2017 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 2017 2018 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:

#### Question 3:

On 1st April, 2014, furniture costing â‚¹ 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for â‚¹ 5,000. Additions are made on 1st April 2015 and 1st October, 2017 to the value of â‚¹ 9,500 and â‚¹ 8,400 (Residual values â‚¹ 500 and â‚¹ 400 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 (Rs) Date Particulars J.F. Amount (Rs) 2014 2015 April 01 Bank (F1) 55,000 March 31 Depreciation (F1) 5,000 March 31 Balance c/d (F1) 50,000 55,000 55,000 2015 2016 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 2016 2017 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 2017 2018 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:

#### Question 4:

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

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

#### Question 5:

From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2018:

 1st April, 2017 : Purchased a second-hand machinery for â‚¹ 40,000 1st April, 2017 : Spent â‚¹ 10,000 on repairs for making it serviceable. 30th September, 2017 : Purchased additional new machinery for â‚¹ 20,000. 31st December, 2017 : Repairs and renewals of machinery â‚¹ 3,000. 31st March, 2018 : Depreciate the machinery at 10% p.a.

 Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particular J.F. Amount (Rs) 2017 2018 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, 2017 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.

#### Question 6:

An asset was purchased for â‚¹ 10,500 on 1st April, 2011. The scrap value was estimated to to be â‚¹ 500 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 â‚¹ 600 on 31st March, 2018. Calculate the following.
(i) The Depreciation expense for the year ended 31st March, 2012.
(ii) The net book value of the asset on 31st March, 2016.
(iii) The grain or loss on sale of the asset on 31st March, 2018.

 Asset Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2011 2012 April 01 Bank 10,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 9,500 10,500 10,500 2012 2013 April 01 Balance b/d 9,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 8,500 9,500 9,500 2013 2014 April 01 Balance b/d 8,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 7,500 8,500 8,500 2014 2015 April 01 Balance b/d 7,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 6,500 7,500 7,500 2015 2016 April 01 Balance b/d 6,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 5,500 6,500 6,500 2016 2017 April 01 Balance b/d 5,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 4,500 5,500 5,500 2017 2018 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, 2012 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2016 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2018 is Rs 2,900

#### Question 7:

A Van was purchased on 1st April, 2015 for â‚¹ 60,000 and â‚¹ 5,000 was spent on its repair and registration. On 1st October, 2016 another van was purchased for â‚¹ 70,000. On 1st April, 2017, the first van purchased on 1st April, 2015 was sold for â‚¹ 45,000 and a new van costing â‚¹ 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.

 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

#### Question 8:

A company whose accounting year is a financial year, purchased on 1st July, 2014 machinery costing â‚¹ 30,000.
It purchased further machinery on 1st January, 2015 costing â‚¹ 20,000 and on 1st October, 2015 costing â‚¹ 10,000.
On 1st April, 2016, one-third of the machinery installed on 1st July, 2014 became obsolete and was sold for â‚¹ 3,000.
Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2017?

 Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2014 2015 July 01 Bank (I) 30,000 March 31 Depreciation 2015 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 2015 2016 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 2016 2016 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 2017 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, 2016 (24,750 × 1/3) 8,250 Less: Sale Value (3,000) Loss on sale 5,250

#### Question 9:

On 1st July, 2015, A Co. Ltd. purchases second-hand machinery for â‚¹ 20,000 and spends â‚¹ 3,000 on reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth â‚¹ 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for â‚¹ 8,000 and on 1st July, 2017, a fresh plant was installed. Payment for this plant was to be made as follows:

 1st July, 2017 â‚¹ 5,000 30th June, 2018 â‚¹ 6,000 30th June, 2019 â‚¹ 5,500

Payments in 2018 and 2019 include interest of â‚¹ 1,000 and â‚¹ 500 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, 2018.

Books of A. Co. Ltd
 Machinery Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2015 2016 July 01 Bank (I) (20,000 + 3,000) 23,000 Mar.31 Depreciation 2016 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 2016 2017 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 2017 2017 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 2018 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, 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 10:

On 1st April, 2015, Shivam Enterprise purchased a second-hand machinery for â‚¹ 52,000 and spent â‚¹ 2,000 on cartage, â‚¹ 3,000 on unloading, â‚¹ 2,000 on installation and â‚¹ 1,000 as brokerage of the middle man. It was estimated that the machinery will have a scrap value of â‚¹ 6,000 at the end of its useful life, which is 10 years. On 31st December 2015, repairs and renewals amounted to â‚¹ 2,500 were paid. On 1st October, 2017, this machine was sold for â‚¹ 30,600 and an amount of â‚¹ 600 was paid as commission to an agent. Calculate the amount of annual depreciation and rate of depreciation. Also prepare the Machinery Account for first 3 years, assuming that firm follows financial year for accounting.

 Machinery Account Dr. Cr. Date Particulars Amount (Rs) Date Particulars Amount (Rs) 2015 2016 Apr. 01 Bank A/c 60,000 Mar. 31 Depreciation A/c 5,400 Mar. 31 Balance c/d 54,600 60,000 60,000 2016 2017 Apr. 01 Balance b/d 54,600 Mar. 31 Depreciation A/c 5,400 Mar. 31 Balance c/d 49,200 54,600 54,600 2017 2017 Apr. 01 Balance b/d 49,200 Oct. 01 Depreciation A/c (for 6 months) 2,700 Bank A/c (Sale) 30,000 Profit and Loss A/c (Loss on Sale) 16,500 49,200 49,200

Working Notes: Calculation of Profit or Loss on Sale

 Particulars Amount Value of Machine as on Apr. 01, 2017 49,200 Less: Depreciation for 6 months 2,700 Value of M1 as on Oct. 01, 2017 46,500 Less: Sale Value 30,000 Loss on Sale 16,500

Note:

1. All the expenses incurred up to the date at which machine is put in use will be added to cost of machine.
2. The amount spent on repairs is a recurring nature expenses. So, it will not be added to Machine A/c.
3. Cost of Machine = 52,000 + 2,000 + 3,000 + 2,000 + 1,000 = Rs 60,000

#### Question 11:

Modern Ltd. purchased a machinery on 1st August, 2015 for â‚¹ 60,000. On 1st October, 2016, it purchased another machine for â‚¹ 20,000 plus CGST and SGST @ 6% each. On 30th June, 2017, it sold the first machine purchased in 2015 for â‚¹ 38,500 charging IGST @ 12%. Depreciation is provided @ 20% p.a. on the original cost each year. Accounts are closed on 31st March every year. Prepare the Machinery A/c for three years.

 Books of Modern Ltd. Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2015 2016 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 2016 2017 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 2017 2017 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 2018 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, 2017 40,000 Depreciation for 3 Months (3,000) Value on June 30, 2017 37,000 Less: Sales Value of Machine (38,500) Profit on sale of Machine 1 1,500

3. Journal entries for purchase and sale with GST
 Journal Date Particulars L.F. Debit Amount (â‚¹) Credit Amount (â‚¹) 2016 Oct 01 Machinery A/c Dr. 20,000 Input CGST A/c Dr. 1,200 Input SGST A/c Dr. 1,200 To Bank A/c 22,400 (Machinery purchased with CGST and SGST @ 6% each paid) 2017 Jun 30 Bank A/c Dr. 43,120 To Machinery A/c 38,500 To Output IGST A/c (Machinery purchased on 1st Aug, 2015 sold with IGST @ 12%.) 4,620

#### Question 12:

On 1st July, 2015, Sohan Lal & Sons purchased a plant costing â‚¹ 60,000. Additonal plant was purchased on 1st January, 2016 for â‚¹ 40,000 and on 1st October, 2016, for â‚¹ 20,000, paying CGST and SGST @ 6% each. On 1st April, 2017, one-third of the plant purchased on 1st July, 2015, was found to have become obsolete and was sold for â‚¹ 6,000, charging CGST and SGST @ 6% each.
Prepare the Plant Account for the first three years in the books of Sohan Lal & Sons. Depreciation is charged @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March each year.