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Depreciation Question and Answers 2

The document contains two examples of machinery accounts with calculations of depreciation. The first is for a company that purchased machinery for Rs. 200,000 in 1974 and sold it for Rs. 120,000 in 1976 after taking depreciation of 10% annually. The second machinery account is for a company that purchased additional machinery over time and sold a machine that became obsolete, recording depreciation and proceeds from sale.

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AMIN BUHARI ABDUL KHADER
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2K views

Depreciation Question and Answers 2

The document contains two examples of machinery accounts with calculations of depreciation. The first is for a company that purchased machinery for Rs. 200,000 in 1974 and sold it for Rs. 120,000 in 1976 after taking depreciation of 10% annually. The second machinery account is for a company that purchased additional machinery over time and sold a machine that became obsolete, recording depreciation and proceeds from sale.

Uploaded by

AMIN BUHARI ABDUL KHADER
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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OMTEX CLASSES

THE HOME OF SUCCESS


DEPRECIATION QUESTION WITH ANSWER
1. A company purchased Machinery worth Rs. 2, 00,000 on 1st January, 1974. Accounting
year of the Company closes on 31st December every year. Company provides depreciation
at 10% p.a. on the original cost. On 31st December, 1976 the machinery was sold for Rs. 1,
20,000. Give the machinery Account for three years. [F.I.M]

Working Note: calculation of depreciation


Date Machinery Total depreciation
1.1.74 200000
Depreciation@10% 20000 20000
1.1.75 180000
Depreciation@10% 20000 20000
1.1.76 160000
Depreciation@10% 20000 20000
31.12.76/1.1.77 140000
Sold 120000
20000(loss)

M/S ______________________
MACHINERY ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1.1.74 To Cash Bank Account 200000 31.12.74 By depreciation Account 20000
31.12.74 By balance c/d 180000
200000 200000
1.1.75 To balance b/d 180000 31.12.75 By depreciation account 20000
31.12.75 By balance c/d 160000
180000 180000
1.1.76 To balance b/d 160000 31.12.76 By depreciation account 20000
31.12.76 By cash / bank account 120000
31.12.76 By profit / loss account 20000
160000 160000
OMTEX CLASSES
THE HOME OF SUCCESS
DEPRECIATION QUESTION WITH ANSWER
2. A Good – luck manufacturing Co. Ltd. Luck now purchased new machinery for Rs.
45,000 on 1st January, 1975 and immediately spent Rs. 5,000 on its fixation and
erection. In the same year on 1st July additional machinery costing Rs. 25,000 was
purchased. On 1st July 1977 the machinery purchased on 1st January, 1975 became
obsolete and was sold for Rs. 30,000. Depreciation was provided for annually on 31 st
December at the rate of 10% per annum on Fixed Instalment method. You are required
to prepare Machinery Account for the period from 1975 to 1977. [F.I.M]

Working Note: calculation of depreciation


Date Machinery Total depreciation
1.1.75 50000
1.7.75 25000
Depreciation@10% 5000 1250 6250
1.1.76 45000 23750

Depreciation@10% 5000 2500 7500


1.1.77 40000 21250
Depreciation@10% 2500 2500
30.6.77/1.7.77 37500
Sold 30000
7500
Loss
Depreciation@10% 2500 2500
1.1.78 18750

M/s Good – luck Manufacturing Co. Ltd.


Machinery Account
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1.1.75 To Cash Bank Account 45000 31.12.75 By depreciation Account 6250
1.1.75 To cash bank account 5000
1.7.75 To cash/bank account 25000 31.12.75 By balance c/d 68750
75000 75000
1.1.76 To balance b/d 68750 31.12.76 By depreciation account 7500
31.12.76 By balance c/d 61250
68750 68750
1.1.77 To balance b/d 61250 1.7.77 By depreciation account 2500
1.7.77 By cash / bank account 30000
1.7.77 By profit / loss account 7500
31.12.77 By depreciation account 2500
31.12.77 By balance c/d 18750
61250 61250
1.1.78 To balance b/d 18750

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