DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : Y.Yella Reddy

Designation : HCCP
Branch : DCCP
Institute :026,S.G.Govt.Polytechnic,Adilabad
Year/Semester : III Semester
Subject : Accountancy-II
Subject Code : CCP-302
Topic : Depreciation
Duration : 50 Min.
Sub Topic : Problems on Diminishing Balance
Method
Teaching Aids : Animations.
CCP302.29 1
Recap:

In the last class we have solved problems on

 Diminishing Balance method.

CCP302.29 2
Objectives

On completion of this period you would be able to solve

 Some more problems on Diminishing Balance
Method.

CCP302.29 3
Illustration

• Vignesh Engineering. Co. purchased a machinery

costing Rs.1,00,000 on 1st January 2001.
The rate of Depreciation was fixed at 20% p.a.
Prepare necessary accounts for five years up to
31st December 2005,under Reducing Balance
Method.

CCP302.29 4
 Sol:-

Journal Entries
Date Particulars Debit (Rs) Credit
(Rs)
2001 Machinery a/c Dr 1,00,000
Jan.1st To Bank a/c 1,00,000
(Being Machinery purchased)

Depreciation a/c Dr 20,000

Dec.31st
To Machinery a/c 20,000
(Being the Depreciation is
calculated for I year)
P&L a/c Dr 20,000
To Depreciation a/c (Being the 20,000
Depreciation is transferred to P&L
a/c) CCP302.29 5
 Journal Entries contd.

Date Particulars Debit Credit

(Rs) (Rs)
2002 Depreciation a/c Dr 16,000
Dec.31st To Machinery a/c 16,000
(Being the Depreciation is
calculated for I year)

P&L a/c Dr 16,000

To Depreciation a/c (Being the 16,000
Depreciation is transferred to P&L
a/c)

CCP302.29 6
 Journal Entries contd.

Date Particulars Debit Credit

(Rs) (Rs)
2003 Depreciation a/c Dr 12,800
Dec To Machinery a/c 12,800
31st (Being the Depreciation is
calculated)

P&L a/c Dr 12,800

To Depreciation a/c (Being the 12,800
Depreciation is transferred to P&L
a/c)

CCP302.29 7
 Journal Entries contd.

Date Particulars Debit (Rs) Credit

(Rs)
2004 Depreciation a/c Dr 10,240
Dec To Machinery a/c 10,240
31st (Being the Depreciation is
calculated)
P&L a/c Dr 10,240
To Depreciation a/c (Being the 10,240
Depreciation is transferred to P&L
a/c)

CCP302.29 8
 Journal Entries contd.

Date Particulars Debit (Rs) Credit

(Rs)
2005 Depreciation a/c Dr 8,192
Dec To Machinery a/c 8,192
31st (Being the Depreciation is
calculated)
P&L a/c Dr 8,192
To Depreciation a/c (Being the 8,192
Depreciation is transferred to P&L
a/c)

CCP302.29 9
 Machinery Account
Dr Cr
Year Particulars Rs. Particulars Rs.
2001 To Cash a/c 1,00,000 By Depreciation 20,000
Jan1st (1,00,000*20/100)
,, Balance c/d 80,000
1,00,000 1,00,000
2002 To Bal b/d 80,000 By Depreciation 16,000
Jan1st
,, Bal c/d 64,000
80,000 80,000
2003 To Bal b/d 64,000 By Depreciation 12,800
Jan1st
,, Bal c/d 51,200
64,000 64,200
CCP302.29 10
 Machinery Account contd.
Dr Cr

Year Particulars Rs. Particulars Rs.

2004 To Bal b/d 51,200 By Depreciation 10,240
Jan1st
,, Bal c/d 40,960
51,200 51,200
2005 To Bal b/d 40,960 By Depreciation 8,192
Jan1st
,, Bal c/d 32,768
40,960 40,960

CCP302.29 11
 Depreciation Account

Dr Cr
Particulars Rs. Particulars Rs.
2001 To Machinery a/c 20,000 By P&L a/c 20,000

20,000 20,000
2002 To Machinery a/c 16,000 By P&L a/c 16,000

16,000 16,000
2003 To Machinery a/c 12,800 By P&L a/c 12,800

12,800 12,800

CCP302.29 12
 Depreciation Account contd.
Dr Cr

Year Particulars Rs. Particulars Rs.

2004 To Machinery a/c 10,240 By P&L a/c 10,240

10,240 10,240
2005 To Machinery a/c 8,192 By P&L a/c 8,192

8,192 8,192

CCP302.29 13
 Illustration

1. A machine is purchased for Rs. 30,000 on 1-1-

2003.
Depreciation is to be charged @ 10% on the
written down value.
Show the Machinery a/c for four years.

CCP302.29 14
Sol:
Machinery Account
Dr. Cr
Date Particulars Rs. Date Particulars Rs.
2003 2003
Jan 1 To Bank a/c 30,000 Dec. 31 By Depreciation 3000
By Balance c/d 27000
30000 30000

2004 2004
Jan 1 To Bal b/d 27000 Dec. 31 By Depreciation 2700
By Balance c/d 24300
27000 27000

2005 2005
Jan 1 To Bal b/d 24300 Dec. 31 By Depreciation 2430
By Balance c/d 21870
24300 24300

2006 2006
Jan. 1 To Bal b/d 21870 Dec. 31 By Depreciation 2187
By Balance c/d 19683
21870 21870

2007
Jan 1 To Bal b/d 19683
CCP302.29 15
 Assignment

 Mohan purchased a machine for Rs.50,000 on 1st

January, 2005.
 He charges depreciation @15% on Diminishing Balance
Method
 Prepare Machinery Account and Depreciation Account
for first four years.

CCP302.29 16