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
1.1.74
Depreciation@10%
1.1.75
Depreciation@10%
1.1.76
Depreciation@10%
31.12.76/1.1.77
Sold

Machinery
200000
20000
180000
20000
160000
20000
140000
120000
20000(loss)

Total depreciation
20000
20000
20000

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
1.1.75
1.7.75
Depreciation@10%
1.1.76

Machinery 1
50000

Depreciation@10%
1.1.77
Depreciation@10%
30.6.77/1.7.77
Sold

5000
40000
2500
37500
30000
7500
Loss

Depreciation@10%
1.1.78

DATE
1.1.75
1.1.75
1.7.75
1.1.76

1.1.77

1.1.78

5000
45000

Machinery 2

Total depreciation

25000
1250
23750

6250

2500
21250

7500
2500

2500
18750

2500

M/s Good luck Manufacturing Co. Ltd.

Machinery Account
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
To Cash Bank Account
45000 31.12.75 By depreciation Account
6250
To cash bank account
5000
To cash/bank account
25000 31.12.75 By balance c/d
68750
75000
75000
To balance b/d
68750 31.12.76 By depreciation account
7500
31.12.76 By balance c/d
61250
68750
68750
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
To balance b/d
18750

OMTEX CLASSES
THE HOME OF SUCCESS
DEPRECIATION QUESTION WITH ANSWER
3. A company purchased a machine worth Rs. 2,00,000 on 1st Jan. 1976. On 1st Jan 1977,
the company purchased an additional machine for Rs. 40,000. On 1 st July 1978, the
company sold the machine purchased on 1st Jan 1977 for Rs. 32,000. Company writes off
depreciation at the rate of 10% on the original cost and the accounts are closed every year
on 31st Dec. Show the Machinery Account and Depreciation Account for the three years
ending 31st Dec. 1976, 1977 and 1978 under Fixed Instalment Method. [F.I.M]
Working Note: calculation of depreciation
Date
1.1.76
Depreciation@10%
1.1.77
Depreciation@10%
1.1.78
Depreciation@10%
31.6.78/1.7.78
Sold

Depreciation@10%
1.1.79

DATE
1.1.76

1.1.77
1.7.77
1.1.78

1.1.79

Machinery
200000
20000
180000
20000
160000

Machinery 2

Total depreciation
20000

40000
4000
36000
2000
34000
32000
2000
Loss

24000
2000

20000
20000
140000
M/S ______________________
MACHINERY ACCOUNT
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
To Cash Bank Account
200000 31.12.76 By depreciation Account
200000
31.12.76 By balance c/d
180000
200000
200000
To balance b/d
180000 31.12.77 By depreciation account
24000
To cash/bank account
40000 31.12.77 By balance c/d
196000
220000
220000
To balance b/d
196000 1.7.78
By depreciation account
2000
1.7.78
By cash / bank account
32000
1.7.78
By profit / loss account
2000
31.12.78 By depreciation account
20000
31.12.78 By balance c/d
140000
196000
196000
To balance b/d
140000

OMTEX CLASSES
THE HOME OF SUCCESS
DEPRECIATION QUESTION WITH ANSWER
37. M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to the Machinery A/c on 1st
April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the Mill
bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation. One more
machinery costing Rs. 20,000 was purchased on 31st March, 2003. Depreciation is charged on
31st March, every year at 10% p.a. under the Diminishing Balanced Method. On 31st March,
2004, the machinery which was purchased on 1st October, 2001 was sold for Rs. 12000. Prepare
Machinery A/c and Depreciation A/c for the years 2001 2001, 2002 2003 and 2003 2004.
(February, 2008)
WORKING NOTE : CALCULATION OF DEPRECIATION
Date
1.4.01
1.10.01
Depreciation @10%
1.4.02
31.3.2003
Depreciation @10%
1.4.03
Depreciation @10%
31.3.01/1.4.04
Sold

Machinery
32000

1.4.04

23328

3200
28800

Machinery 2

Machinery 3

16000
1800
15200

Total depreciation

4000
20000

2880
25920
2592

1520
13680
1368
12312
12000
312
Loss

4400
20000
2000

5960

18000
M/S ______________________
MACHINERY ACCOUNT
DATE
PARTICULARS
AMOUNT DATE
PARTICULARS
AMOUNT
1.4.01 To balance b/d
Nil 31.3.02 By depreciation account
4000
1.10.01 To cash / bank account
15000
1.10.01 To cash bank account
1000
31.3.02 By balance c/d
44000
48000
48000
1.4.02 To balance b/d
44000 31.3.03 By depreciation account
4400
31.3.03 To cash / bank account
20000
31.3.03 By balance c/d
59600
64000
64000
1.4.03 To balance b/d
59600 31.3.04 By depreciation account
5960
31.3.04 By cash bank account
12000
31.3.04 By profit / loss account
312
31.3.04 By balance c/d
41328
59600
59600
1.4.04 To balance b/d
41328

OMTEX CLASSES
THE HOME OF SUCCESS
DEPRECIATION QUESTION WITH ANSWER
38. On 1st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On
1st October, 2004 they purchased one more computer for Rs. 40,000. On 1 st October,
2006 they sold one computer, which was purchased on 1st April, 2004 for Rs. 18,780.
Depreciation on computers was provided @ 10% p.a. on diminishing balance method
and the financial year closes on 31st March every year. Prepare computer A/c
depreciation A/c for years 2004 05, 2005 06 and 2006 07. (September. 2008)
[W.D.V.]
WORKING NOTE : CALCULATION OF DEPRECIATION
Date
1.4.04
1.10.04
Depreciation @10%
1.4.05
Depreciation @10%
1.4.06
Depreciation @10%
30.9.06/1.10.06
SOLD

Depreciation @10%
1.4.07

Machinery
40000
4000
36000
3600
32400
1620
30780
18780
12000
Loss

Machinery 2
40000
4000
36000
3600
32400

Machinery 3
40000
2000
38000
3800
34200

Total depreciation

10000
11000
1620

3240
3420
6660
9160
30780
M/S ______________________
MACHINERY ACCOUNT
DATE
PARTICULARS
AMOUNT DATE
PARTICULARS
AMOUNT
1.4.04 To cash / bank account
40000 31.3.05 By depreciation account
10000
1.4.04 To cash / bank account
40000
1.10.04 To cash / bank account
40000 31.3.05 By balance c/d
110000
120000
120000
1.4.05 To balance b/d
110000 31.3.06 By depreciation account
11000
31.3.06 By balance c/d
99000
110000
110000
1.4.06 To balance b/d
99000 1.10.06 By depreciation account
1620
1.10.06 By cash/bank account
18780
1.10.06 By profit / loss account
12000
31.3.07 By depreciation account
6660
31.3.07 By balance c/d
59940
99000
99000
1.4.07 To balance b/d
59940

OMTEX CLASSES
THE HOME OF SUCCESS
DEPRECIATION QUESTION WITH ANSWER
5. M/s Amol Industries, Pune, purchased machinery for Rs. 19,400 on 1st January, 1976, and
spent Rs. 600 for its erection. On 1st July 1976, additional machinery costing Rs. 10,000 was
acquired. On 1st July 1978 the machinery purchased on 1st January, 1976 was sold for Rs. 12,000
and on the same date fresh machinery was purchased at a cost of Rs. 16,000. Depreciation was
provided annually on 31st December at the rate of 10% on the original cost. Give the machinery
account and deprecation account for 1976, 1977 and 1978. [F.I.M]
WORKING NOTE : CALCULATION OF DEPRECIATION
Date
1.1.76
1.7.76
Depreciation @10%
1.1.77
Depreciation @10%
1.1.78
Depreciation @10%
30.6.78/1.7.78
Sold

1.7.78
Depreciation @10%
1.1.79

Machinery
20000
2000
18000
2000
16000
1000
15000
12000
3000
Loss

Machinery 2
10000
500
9500
1000
8500

Machinery 3

Total depreciation

2500
3000
1000

16000
1000
800
1800
7500
15200
M/S ______________________
MACHINERY ACCOUNT
DATE
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
1.1.76 To cash / bank account
19400 31.12.76 By depreciation account
2500
1.1.76 To cash/ bank account
600
1.7.76 To cash bank account
10000 31.12.76 By balance c/d
27500
30000
30000
1.1.77 To balance b/d
27500 31.12.77 By depreciation account
3000
31.12.77 By balance c/d
24500
27500
27500
1.1.78 To balance b/d
24500 1.7.78
By depreciation account
1000
1.7.78 To cash/bank account
16000 1.7.78
By cash / bank account
12000
1.7.78
By profit / loss account
3000
31.12.78 By depreciation account
1800
31.12.78 By balance c/d
22700
40500
40500
1.1.79 To balance b/d