DEPRECIATION
1. On 1st Jan 2020 a company purchased machinery for 20000 and spent 1000 on its carriage and
2000 on its erection. On the date of purchase scrap value oof machine would be 8000 at end of
tenth year. It was decided to provide depreciation by fixed installment method and close books each
year on 31 dec. Pass journal for first three years and show necessary accounts.
2. Mahesh traders bought machinery on 1st Jan 2021 oof 119000 and spent 15000 on its
establishment. The estimated life of machine is five years . After which its residual value is
estimated [Link] annual depreciation according to fixed installment method and
prepare machinery account.
3. On 1st Jan 2005 a business purchased furniture costing 10000. On 1st April 2004 the furniture was
sold for [Link] furniture account calculating depreciation at 10% p.a. on original cost method
. Accounts are closed on 31st Dec every year.
4. On 1st Jan 2009 a company purchased a plant for 20000. On 1st July in same year it purchased
additional plant worth 8000 and spent 2000 on erection. On 1st July 2010 the plant purchased on 1st
Jan 2009 having become obsolete was sold for 12500. On 1st Oct. 2011 a fresh plant was
purchased for 28000 and on same date the plant purchased on 1st July 2009 was sold at 6000.
Depreciation provided at 10% per annum on original cost on 31 st Dec every year. Show plant
account.
5. Modern Ltd purchased machinery on 1st May 2003 for 60000. On 1st July 2004 it purchased another
machine for 20000. On 31st March 2005 it sold the first machine purchased in 2003 for 38500 and
on same date, purchased new machinery for 50000. Depreciation is provided at 20% pa on original
cost each year. Accounts are closed on 31st dec.
6. Jain Bros. purchased a machine on 1st Jan 2003 at a cost of 60000 and spent 4000 on installation.
The firm writes off depreciation at 25% by the written down value method. The scrap value of plant
at end of its economic life of 4 years is expected to be 20250. Show machine account.
7. On 1st April 2004 the Jaipur golden transport company purchased a truck for 100000. On 1st Oct
2006 this truck was met an accident and was completely destroyed and 60000 was received from
insurance company in full settlement. On the same date another truck was purchased by company
for 50000. The company writes off 20% depreciation p.a. on written down value method. Prepare
truck account for 2004 to 2006.
8. On 1st April 2003 a firm purchased a machine for 200000. On 1 st Oct in same year additional
machinery costing 100000 was purchased . On 1st Oct 2004 the machinery purchased on 1st April
2003 having become obsolete, was sold off for 90000. On 1 st Oct 2005 new machinery was
purchased for 250000 while machinery purchased on 1 st Oct 2003 was sold for 85000 on the same
day. Depreciation on its machinery at 10% pa on original cost
Prepare machinery account , provision for depreciation account and depreciation account for period of
accounting years ending 31st March 2006.
