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This document contains questions about accounting for fixed assets like machinery and furniture. It asks about acceptable depreciation methods, limitations of certain methods, how to record depreciation entries over multiple years, and preparation of machinery accounts showing purchases, sales, depreciation, and other transactions over time.

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nyssapandey9
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33 views

Untitled Document

This document contains questions about accounting for fixed assets like machinery and furniture. It asks about acceptable depreciation methods, limitations of certain methods, how to record depreciation entries over multiple years, and preparation of machinery accounts showing purchases, sales, depreciation, and other transactions over time.

Uploaded by

nyssapandey9
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1.

Which method is approved by income tax authorities for charging


depreciation?
2. Name the method that assumes that an asset should be depreciated more
in the earlier years and less in later years of use.
3. Charging the whole cost of asset in the first year itself is not correct. Why?
4. Although, written down value method is based upon a more realistic
assumption, it suffers from some limitations. Give any three such
limitations.
5. Name and explain different type of reserves in details.
6. On 1st April 2014, merchant purchased furniture costing Rs.55,000. It is
estimated that its life is 10 years at the end of which it will be sold
Rs.5,000. Additions are made on 1st April 2015 and 1st October 2017 to
the value of Rs.9,500 and Rs.8,400 (Residual values Rs.500 and Rs.400
respectively). Show the Furniture Account for the first four years, if
Depreciation is written off according to the Straight Line Method.
7. From the following transactions of concern, prepare the Machinery Account for
the year ending 31 st March, 2017 :

1. Purchased a second – hand machinery for Rs.40,000


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1
7

1. Spent Rs.10,000 on repairs for making it serviceable.


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1
7

30 Purchased additional new machinery for Rs.20,000


.
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1
7

31 Repairs and renewals of machinery Rs.3,000.


.
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1
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31 Depreciate the machinery at 10% per annum.


.
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8. A firm purchased on 1st January, 2010 a second-hand machinery for


Rs.36,000 and spent Rs.4,000 on its installation.
On 1st July in the same year, another machinery costing Rs.20,000 was
purchased. On 1st July, 2012 machinery brought on 1st January, 2010 was
sold for Rs.12,000 and a new machine purchased for Rs.64,000 on the
same date. Depreciation is provided annually on 31st December @ 10%
per annum on the written down value method. Show the machinery
account from 2010 to 2012.
9. A Company purchased a machine for Rs. 40,000 on April 1, 2014. On
October 1, 2015 it was sold for Rs. 13,000. The company charges
depreciation @ 10% p.a. on straight-line method. Show Machinery
Account, Provision for Depreciation Account and Machinery Disposal
account if books are closed on March 31 each year.
10. A firm purchased on 1st April 2015 certain machinery for Rs.5,82,000 and
spent Rs.18,000 on its installation. On 1st October 2015, additional
machinery costing Rs.2,00,000 was purchased. On 1st October 2017, the
machinery purchased on 1st April 2015 was auctioned for Rs.2,86,000 plus
CGST and SGST @ 6% each and new machinery for Rs.4,00,000, plus
IGST @ 12% was purchased on the same date. Depreciation was
provided annually on 31st March at the rate of 10% on the Written Down
Value Method. Prepare the Machinery Account for the three years ended
31st March 2018.
11.

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