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Depreciation

The document contains examples and assignment questions related to calculating depreciation of machines using different methods. It provides information on costs of machines, estimated lives, scrap values, and asks to calculate depreciation amounts and rates using the straight line and diminishing balance methods over multiple years.

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Theivanayaki M PSGRKCW
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110 views3 pages

Depreciation

The document contains examples and assignment questions related to calculating depreciation of machines using different methods. It provides information on costs of machines, estimated lives, scrap values, and asks to calculate depreciation amounts and rates using the straight line and diminishing balance methods over multiple years.

Uploaded by

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

Sample:

X limited purchased a machine on April 1, 2011 for ‘ 1,00,000 whose life was expected to be
10 years. Its estimated scrap value at the end of 10 years was ‘ 10,000. Find the amount of
depreciation to be charged to Profit and Loss Account every year. Calculate the rate on which
depreciation is to be charged every year

Sample 2:
Salman and Usman Bros. acquired a machine on July 1, 2008 at a cost of ` 70,000 and spent `
5,000 on its installation. The firm writes off depreciation @ 10% on straight line method. The
books are closed on December 31 every year. Show the machinery and depreciation account
for three years. Solution Cost of Machine ` 70,000
Cost of Installation ` 5,000
Total ` 75,000
Rate of Depreciation is 10%.
Then annual depreciation will be 10% of 75000 = ` 7,500.
Assignment Questions:
1. ABC firm purchased a machine at a cost of Rs.2,00,000. Its life was estimated to be 5
years with a scrap value of Rs.10,000. Calculate the amount of depreciation and rate
of depreciation to be charged at the end of each year (using straight line method).
2. A machine was purchased on January 1, 2011 for ` 1,00,000 and its useful life is 10
years. After completing its useful life the machine will be scraped and nothing will be
realized from it. It is decided to charge depreciation on this machine @ 10% p. a. on
Straight Line Method. Calculate amount of depreciation for each year during the
useful life of this machine
3. A machine was purchased on January 1, 2011 for ` 1,00,000 and its useful life is 10
years. After completing its useful life the machine will be scraped and ` 4,000 will be
realized from it. It is decided to charge depreciation on this machine @ 10% p. a. on
Diminishing Balance Method. Calculate amount of depreciation for each year during
the useful life of this machine.
4. XYX firm bought a machinery for Rs.2,00,000 on 1-1-2015. On 1-6-2016, he bought
another machine for Rs.50,000. On 1-10-2017, he purchased another machine for Rs.
10,000. Provide depreciation at 10% p.a. on straight line method. Prepare machinery
account for the years 2015 to 2017 by using accounts by assuming accounts are closed
on 31st December every year.

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