a n d s o UH.

the next year,

Calculation of Depreciation by Annuity Method
Tllustration 21
are requred to
Moti Lal & Sons purchased a lease of 7 14,000 1st April, 2011 for 10 years. You
on

according to Annuity Method. You find with the

open Lease
Account for 10 years charging depreciation
interest at 5
of Depreciation Table that to depreciate F 1 by Annuity Method over 10 years charging
help
a sum ofF 0.129504 every year.
one must write-ofi

Solution 21
Depreciation of F 1 in one year is 0.129504.
Depreciation of 7 14,000 in one year is 0.129504 x 14,000 = 7 1,813 Approx.
Lease Account
2011 2012
Mar. 31 By Depreciation A/c 1,813
April1 To Bank A/c 14,000
2012 Mar. 31 ByBalance c/d 12,887
Mar. 31 To Interest A/c 700
14,700 14,700
2012 2013
April 1 To Balance b/d 12,887 Mar. 31 By Depreciation A/c 1,813
 FINANCIAL ACCOUNTING

Balance c'd 11.718

2018 Mar. 31 By
Mar 31 T» Intewst Ac 644
13.531
13.531
2014 1.813
013 Ae
Balaner bd 11.718 Mar. 31 By Depreciation 10.491
April 1 ' Mar. 31 By Balance dd
2014
586 12.304
Mar. 31 T Intemst A/c 12,304
2015 1.813
2014 Ae
10491 Mar. 31 By Depreciation 9.203
April 1 1» Balance bd
Mar. 31 By Balance c/d
2015
Mar 31 T lnterwst A/ 525 11.016
11.016
2016 1.813
2016
9.203 Mar. 31 By Depreciation Ae
1 bBalance bd 7.850
April Mar. 31 ByBalance cld
2016
460
Mar 31 Tb Interest A/e 9.663
9.663
2017 1.813
2016 7.850 Mar. 31 By Depreciation A/c 6.430
T Balance b/d
April 1
Mar. 31 By Balance cdd
2017 393
Mar. 31 1b Interest A/e 7 8243
8,243
2018
1.813
2017
Balance b/d
6,430 Mar. 31 By Depreciation A/c 4.938
April 1 T Mar. 31 ByBalance c'd
2018 321
Mar. 31 To Interest A/e 6.751
6,751
2019
2018 1.813
|

Balance b/d 4,938 Mar. 31 By Depreciation Ac 3.372

April 1 T Mar. 31 By Balance c/d
2019
247
Mar. 31 Tb Interest A/c 5.185
5,185
2020
2019 A/c 1.813
April 1 Tb Balance b/d
3,372 Mar. 31 By Depreciation
c/d 1.727
Mar. 31 By Balance
2020
168
Mar. 31 Tb Interest A/c 3,540
3,540
2021
2020 1.813
1 To Balance b/d 1,727 Mar. 31 By Depreciation A/e
April
2021
86
Mar. 31 To Interest A/c 1.813
1813
1,813
Profit and Loss Account