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Aarambh 2.0 2024

Depreciation DPP- 03

1. On 1st July, 2015, A Co. Ltd. purchases second-hand machinery for ₹ 20,000 and spends ₹ 3,000 on reconditioning
and installing it. On 1st January, 2016, the firm purchases new machinery worth ₹ 12,000. On 30th June, 2017, the
machinery purchased on 1st January, 2016, was sold for ₹ 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 – ₹ 5,000
30th June, 2018 – ₹ 6,000
30th June, 2019 – ₹ 5,500
Payments in 2018 and 2019 include interest of ₹ 1,000 and ₹ 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.

2. A firm purchased a second-hand machine on 1st April, 2015 and paid ₹ 1,40,000 for it. It spent ₹20,000 on its
overhauling and installation. On 1st October, 2015, another machine costing ₹ 80,000 was purchased. On 1st
October, 2017, the machine purchased on 1st April, 2015 was disposed off for ₹ 1,04,000, charging CGST and
SGST @ 6% each and a new machine costing ₹ 2,00,000 was installed, paying CGST and SGST @ 6% each.
Depreciation was provided @ 10% p.a. by the Straight-Line Method. Give the Machinery Account and Depreciation
Account for 3 years. Firm’s books are closed on 31st March every year.

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Answer Key
1. (H&S)
2. (H&S)
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Hints & Solutions

1. (H&S)
In the Books of A. Co Ltd
Machinery

Date Particulars J.F Rs. Date Particulars J.F Rs.

2015 2016
July 01 To Bank A\c Mar 31 By Depreciation A\c
Machinery 1 (20,000 + 3,000) 23,000 Machinery I (9 months) 1725
2016 Machinery II (3 months) 300 2,025
Jan 01 To Bank A\c
Machinery II 12,000 Mar 31 By Balance A\c
Machinery I 21,275
35,000 Machinery II 11,700 32,975
35,000
2016 2017
Apr 01 To Balance b\d Mar 31 By Depreciation A\c
Machinery I 21,275 Machinery I 2,300
Machinery II 11,700 32,975 Machinery II 1,200 3,500

Mar 31 By Balance A\c

32,975 Machinery I 18,975
Machinery II 10,500 29,475
2017 32,975
Apr 01 To Balance c\d
Machinery I 18,975 2017
Machinery II 10,500 29,475 June 30 By Bank A\c
Machinery II 8,000

July 01 To Bank A\c June 30 By Depreciation II (3 months) 300

Machinery III 5,000 June 30 By Profit and Loss A\c 2,200
July 01 To Creditors for Machinery A\c 10,000 2018
(Machinery III)
Mar 31 By Depreciation A\c
Machinery I 2,300
Machinery III (on 15,000 for 8 Months)
1,125 3,425

By Balance c\d
Machinery I 16,675
Machinery III 13,875 30,550

44,475 44,475

2. (H&S)
Machinery Account

Date Particulars J.F Rs. Date Particulars J.F Rs.

2015 2016
Apr 01 To Bank A\c Mar 31 By Depreciation A\c
Machinery I 1,60,000 Machinery I 16,000
Oct 01 To Bank A\c Machinery II 4,000 20,000
Machinery II 80,000

Mar 31 By Balance c\d 1,44,000

80,000 Machinery I 76,000 2,20,000
2,40,000 Machinery II 2,40,000
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2016 2017
Apr 01 To Balance b\d Mar 31 By Depreciation A\c
Machinery I Machinery I 16,000
1,44,000 Machinery II 8,000 24,000
Machinery II 76,000 2,20,000 Mar 31 By Balance c\d
Machinery I 1,28,000
Machinery II 68,000 1,96,000
2,20,000 2,20,000

2017
2017 To Balance b\d Oct 1 By Depreciation A\c 8000
Apr 01 Machinery I 1,28,000 Machinery I (6 Months)
Machinery II 68,000 1,96,000 Oct 1 By Bank A\c 1,04,000
Oct 1 By profit and Loss A\c 16,000
To Bank A\c 2018
Oct 01 Machinery III 2,00,000 Mar 31 By Depreciation A\c
Machinery II 8,000
Machinery III (6 Months) 10,000 18,000
By Balance c\d
Mar 31 Machinery II 60,000
Machinery III (6 Months) 1,90,000 2,50,000

3,96,000 3,96,000

Depreciation Account
Date Particulars J.F Rs. Date Particulars J.F Rs.
2016 2016
Mar 31 To Machinery A\c 20,000 Mar 31 By Profit and Loss A\c 20,000
20,000 20,000

2017 2017 24,000

Mar 31 To Machinery A\c 24,000 Mar 31 By Profit and Loss A\c 24,000
24,000

2017
Oct 01 To Machinery A\c 8,000
2018 2018
Mar 31 To Machinery A\c 18,000 Mar 31 By Profit and Loss A\c 26,000
26,000 26,000

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