Depreciation

  1. On 1st April 2008, a firm purchased a machinery for Rs. 2,00,000. On 1st October 2008, additional machinery costing Rs.1,00,000 was purchased. On 1st October 2009, the machinery purchased on 1st April 2008, was sold for Rs. 90,000, On 1st October 2010, new machinery was purchased for Rs. 2,50,000, while the machinery purchased on 1st October 2008, was sold for Rs. 85,000, on the same day. The firm provides depreciation on its machinery at 10% p.a. on original cost. It closes its books of accounts on 31st March every year. Show the Machinery account for three accounting years ending 31st March 2011. [Loss on sale of first machinery Rs. 80,000; Profit on sale of second machinery Rs. 5,000 ; Balance of machinery account Rs. 2,37,500]
  2. The Ganges Transport Company purchases 5 trucks at Rs. 10,00,000 each on 1st July 2007.On January 1, 2010 one of the trucks is involved in an accident and is completely destroyed. A sum of Rs. 4, 00,000 is received from the insurers in full settlement. On the same date another trucks is purchased by the company for Rs. 12, 00,000. The company writes off 20% on the original cost per annum and closes its books every year on 31st March. Give the Motor trucks account for two year ending 31st March 2011. [Loss on sale of first truck Rs. 1,00,000; Balance of truck account Rs. 19,00,000]
  3. On 1st July, 2008 Gopal Ltd. Purchased second-hand machinery for Rs. 20,000 and spent Rs. 3,000 on re-conditioning and installing it. On 1st January 2009 the firm purchased machinery worth Rs. 12,000. On 30th June, 2010 the machinery purchased on 1st January 2009, was sold for Rs. 8,000. On 1st July 2010 fresh machinery was purchased on installment basis, payment for the machinery was to be made as follows:
    1st July 2010 Rs.5,000
    30 June 2011 Rs.6,000
    30 June 2012 Rs.5,500
    Payment in 2011 and 2012 include interest of Rs. 1,000 and Rs. 500 respectively.The company writes off depreciation @ 10 p.a. on original cost. The accountants are closed every year on 31st March. Show Machinery account for three years ending 31st March. [Loss on sale of machinery Rs. 2,200; Balance of machinery account Rs. 30,550]
  4. On 1st January 2005 a merchant purchase a furniture costing Rs. 33,000. Additions were made to the furniture on 1st January 2006 and on 1st July 2008 to the value of Rs. 9,500 and Rs. 8,400. It is estimated that the furniture has a working life of 10 years on an average. At the end of its life, the furniture would fetch Rs. 3,000; Rs. 500 and Rs. 400 respectively as a residual value. Show Furniture account for the four years ending on 31st December, every year if depreciation is provided on straight line method.Hints:–Annual Depreciation for Furniture I = (33,000 – 3,000)/10 = Rs. 3,000
    Annual Depreciation for Furniture II = (9,500 – 500)/10 = Rs.900
    Annual Depreciation for Furniture III = (8,400 – 400)/10 = Rs. 800
    [Balance of furniture account Rs. 35,800]
  5. A company acquired the following assets as under;On 01.01.2009 a plant costing Rs. 75,000 and having estimated life of 15 years
    On 01.04.2009 a plant costing Rs. 37,500 with an estimated life of 10 years.
    On 01.07.2010 a plant costing Rs. 30,000 and its estimated life 8 years
    On 01.01.2011 a plant costing Rs. 50,000 having as estimated life of 6 years.On 01.07.2011 a part of the plant costing Rs. 15,000 on 01.01.2009 was sold for Rs. 8,400. Residual value of each of the plant acquired is 10% of its original cost. Company charges depreciation on straight line method and closes its books of account on 31st December each year. Prepare Plant Account for the Years 2009,2010,2011.
    [ Loss on sale of part of P1= Rs. 4,350; Balance of Plant account Rs. 1,13,244]
  6. A company had bought machinery for Rs. 200,000 including a boiler worth Rs. 20,000. The Machinery Account had been credited for Depreciation on the reducing installment system for the past four years at rate of 10%. During the fifth year the boiler become useless on Account of damage to some of its vital parts. The damage boiler is sold in the very beginning of the fifth year for Rs. 4,000.Write up the Machinery Account for all these five years. [Loss on sale of Boiler Rs. 9,122 ; Balance of machinery account Rs. 1,06,288]
  7. Mr. X Purchased a second hand machinery on 1-2-2009 for Rs. 50,000; paid Rs. 11,000 for its overhauling and Rs. 5,000 for its installation which was completed by 31-03-2009. The company provides depreciation on its machinery at 15% on diminishing balance method from the date it was put to use and close its books on 31st December every year. On 1-10-2010, a repair work was carried out on the machine and Rs. 5,000 were paid for the same. The Machines was sold on 31-10-2011, for a sum of Rs. 11,000 and an amount of Rs, 1,000 was paid as dismantling charges. Prepare Machinery Account from 2009 to 2011. [Loss on sale of machinery Rs. 33,566]
  8. On 1-2-2009 Mr. X Purchased second hand machinery for Rs. 50,000, paid Rs. 11,000 for its overhauling and Rs. 5,000 for its installation which was completed on 31-3-2009. On 1-10-2010 a repair work was carried out on the machine and Rs. 5,000 were spent for the same. The machine was sold on 31-10-2011 for a sum of Rs. 21,000 and an amount of Rs.1,000 was paid as dismantling charges. The company provides depreciation on its machinery at 20% on diminishing balance method and closes its books on 31st December every year. Prepare Machinery Account from 2009 to 2011. [Loss on sale of machinery Rs. 17,400]
  9. A company provides depreciation on plant and machinery at 20% per annum on reducing balance method. On 1st April 2010, the balance of plant and machinery account was Rs. 5,00,000. It was discovered in 2010-11 that:-
    Rs. 25,000 being repairs to machinery incurred on June 30 2008, had been capitalized.
    Rs. 50,000, being cost of machines purchased on October 1, 2007, had been treated as ordinary goods.
    Management wants to correct the mistake while preparing account for the year ended 31st March 2011. A plant that cost Rs. 40,000 on September 30, 2009, was scraped and replaced with a modern plant on 31st December 2010, by spending Rs. 60,000. Calculate the amount of Depreciation for the year ended March 31, 2011. Also prepare Machinery Account up to March 31, 2011. Hints:- Adjustment for mistake by Rs. 11,800 (Rs. 28,800 – 17,000) [Loss on sale of plant Rs. 30,600; Balance of machinery account Rs. 4,37,640]
  10. On 1st January 2009 Machinery was purchase for Rs. 80,000. On 1st January 2010, additions were made to the machinery of Rs. 40,000. On 31st March 2011, Machinery purchased on 1st January 2010 costing 12,000 was sold for Rs. 11000 and on 30 June 2011 machinery purchased on 1st January 2009 costing Rs. 32,000 was sold for Rs. 26,700. On 1st October 2011 addition were made to the amount of Rs. 20,000. Depreciation was provided at 10% per annum on diminishing balance method. Show machinery account for 3 year from 2009 to 2011. [Profit on sale of second machine Rs. 470 ; Profit on sale of first machine Rs. 2,076; Balance of machinery account Rs. 77,172]
  11. A machine is purchased for Rs. 1,60,000 on 16-6-2006. The company took delivery on 27-6-2006 incurring Rs. 2,500 for transportation. The Machine was installed on 15-07-2006 spending Rs. 2,000 for wages and Rs.1,000 of Consultancy fees. Trial run was conducted on 15-11-2006 spending of Rs. 2,500.The machine was put to use on 1-1-2007. Useful life of the machine was expected to be 5 years and scrap value at the end was expected to Rs. 12,000. The firm follows straight line method of depreciation. Show Machinery Account and Provision for Depreciation Account assuming that machine realized of Rs. 13,000 at the end of 5 years. [Profit on sale of Machine Rs. 1,000]
  12. On 1st April 2008 a firm purchased machinery for Rs. 2,00,000. On 1st October in the same accounting year additional machinery costing Rs. 1,00,000 was purchased. On 1st October, 2009 the machinery purchased on 1st April, 2008 having become obsolete, was sold off for Rs. 90,000.On 1st October, 2010 new machinery was purchased for Rs. 2,50,000 while the Machinery purchased on 1st October 2008 was sold for Rs. 85,000 on the same day. The firm accumulates depreciation on its machinery @ 10% per annum on original cost on 31st March every year. Show Machinery Account, Provision for Depreciation Account, and Depreciation Account for the period of three accounting years ending 31st March 2011 [ Loss on sale of first machinery = Rs. 80,000; Profit on sale of second machinery Rs. 5,000]
  13. Friends Photocopiers purchased five photocopying machines for Rs. 75,000 each on 1st July, 2008. The accounting year closed on 31st March. The Company policy is to charge depreciation @ 10% p.a. on Straight Line Method to Profit and Loss A/c and credit the Provision for Depreciation Account. One photocopy machine purchased on 1st July 2008 for 50,000 was sold on 1st October, 2011 for Rs. 35,000. On 1st January, 2012 a new high power photocopier was purchased for Rs.1,25,000.
    Prepare Photocopier Machines Account and Provision for Depreciation Account for the years ending March, 2009, 2010, 2011 and 2012.
    [Profit on sale of machinery Rs. 1,250]
  14. Radhika Photocopying purchased 5 photocopying machines for Rs. 60,000 each on 1st January, 2012. The accounting year closed on 31st December. The Company policy is to charge depreciation @ 10% p.a. on Straight Line Method to Profit and Loss A/c and credit the Provision for Depreciation Account. On 1st January 2014, one photocopy machine sold for Rs. 40,000 and on 1st April, 2014 another machine was sold for Rs.28,000. On 1st July, 2014 a high power photocopier was purchased for Rs.1,00,000.
    Prepare Photocopier Machines Account and Provision for Depreciation Account for the years 2012 to 2014.
    [Loss on sale of first Photocopier Machines Rs. 8,000 ; Loss on sale of second Photocopier Machines Rs. 12,500; Balance of Photocopier Machines Rs.2,80,000; Balance of Provision for Depreciation Rs.77,000]
  15. Following balances appear in the books of Rohan Bros:
    1st January 2011 Machinery Account Rs.80,000
    Provision for Depreciation Rs.36,000
    On January 1, 2011, they decided to sell a machine for Rs. 8,700. This machine was purchased for Rs. 16,000 in January 2007.
    You are required to prepare Provision for Depreciation Account and Machinery Account on December 31, 2011 assuming the firm has been charging depreciation at 10% per annum on straight line method. [ Loss on sale of machinery = Rs. 900]
  16. On 1st April 2009 M/s Gulab & Associates purchased four trucks for Rs. 2,00,000 each. His Accounting year ends on 31st March. Depreciation @ 10 % on original cost has been charged to Profit & Loss Account and credited to a separate provision for depreciation account.
    On 1st April 2010, one truck was sold for Rs. 1,60,000 and on 1st April 2011, a second truck was sold for Rs. 1,50,000. A new truck which cost Rs. 3,00,000 was Purchased on 1st October 2010. The same rate of depreciation was decided for the new machine.
    Prepare:
    Truck A/c
    Truck Disposal A/c
    Provision for Depreciation A/c
  17. Rama Motors Limited purchased a machinery for Rs. 15,00,000 on April 1 , 2007 . On 1st October 2008, another machines was purchase for Rs. 6,00,000. On 1st October 2009, a new machinery was purchased for Rs. 4,50,000. Depreciation at 20 % per annum on the diminishing value basis was accumulated in Provision for Depreciation Account. On 1st January 2011, Machinery No.2 (purchased on 1st October 2008) was damaged and had to be replaced by a new machinery costing Rs. 7,50,000. It was expected that damaged machine will fetch Rs. 33,000 but it was insured and an insurance claim for Rs. 3,72,000 was admitted by the insurers. Show for the year ended 31st March 2011, the Machinery Account, Provision for Depreciation Account and Machinery Disposal Account. [Profit on sale of machinery Rs. 37,800; Balance of Machinery Account on Last year Rs. 27,00,000 and Balance of Provision for depreciation Account Rs.10,49,100]
  18. A Co. charged depreciation @ 20% on written down value. Machinery costing Rs. 1,00,000, Rs. 40,000 and Rs. 30,000 were purchased on 1-1-2000, 1-7-2001, and 1-10-2002, respectively. On 1-10-2003, Machinery purchased on 1-7-2001 was damaged and replaced by a new machine costing Rs. 50,000. The damaged machinery was insured and insurance claim of Rs. 24,800 (after adjustment of value of scrap) was admitted by the insurance Co. The Scrap was sold for Rs.2,200.
    Show Machinery Account, Accumulated Depreciation Account and Machinery Disposal, for the year 2003.
  19. A limited company purchased on 1st January 2008 a second hand plant for Rs. 12,000 and immediately spent Rs, 8,000 on its overhauling. On 1st July in the same year additional plant costing Rs. 10,000 is purchased. On 1st July 2010, the plant purchased on 1st January 2008 having become obsolete is sold Rs. 4,000 and on the same date fresh plant is purchased at a cost of Rs. 24,000. Depreciation is provided at rate of 10% per annum on original cost on 31st December every year. In 2011, however, the company changes the method of providing depreciation and adopts the method of writing off 15 % per annum on diminishing balance method. Show Plant Account from 2008 to 2011. [Loss on sale of first plant Rs. 11,000; Additional Depreciation Rs. 1,416; Depreciation for Last Year Rs. 4,332 and Balance on Last year Rs. 24,552]
  20. The book value of plant and machinery on 1-1-2009 was Rs. 2,00,000. New machinery for Rs. 10,000 was purchased on 1-10-2009 and for Rs. 20,000 on 1-7-2010. On 1-4- 2011 machinery whose book value had been Rs. 30,000 on 1-1-2009 was sold for Rs. 16,000. Depreciation had been charged at 10% per annum since 2009 on straight line method. It was decided in 2011 that depreciation at 20% p.a. on diminishing balance method should be charged with retrospective effect since 1-1-2009. Show Plant and Machinery Account, up to 31-12-2011. Give detailed workings. [Additional Depreciation Rs. 29,350; Depreciation for Last Year Rs. 26,880 and Balance on Last year Rs. 1,07,520]
  21. On 1st January, 2008 R & Co. purchased machinery for Rs. 74,000 and spent Rs. 4,000 on its repair and Rs. 2,000 on its installation. On 1st January 2009 the firm purchased another machinery for Rs. 20,000. On 1st July 2011 the machinery purchased on 1st January 2008 was sold for Rs. 56,000 and on the same date a new machinery was purchased for Rs. 50,000. On 1st July 2011 the machinery purchased on 1st January 2009 was sold for Rs. 4,000.In 2008 depreciation was charged at the rate of 10% per annum on original cost of assets. From 2009 it decided to write off depreciation at rate of 15% per annum on Written Down Value Method with retrospective effect. Show the Machinery A/c for 4 years starting from 2008. [Additional Depreciation Rs. 4,000; Depreciation for Last Year Rs. 8,022 and Balance on Last year Rs. 39,312]
  22. A Purchase on 1st January 2006 certain machinery for Rs. 1,94,000 and spent Rs. 6,000 on its erection. On 1st July 2006 additional machinery costing Rs. 1,00,000 was purchased. On 1st July 2008, the machinery purchased on 1st January 2006 having become obsolete was sold Rs. 1,00,000 and on the same date new machinery was purchased at a cost of Rs. 1,50,000. Depreciation was provided annually on 31st December at the rate of 10% per annum of the original cost of the machinery. No depreciation need be provided when a machinery is sold, for that part of the year in which sale took place. In 2009, however, A changed the method of providing depreciation and adopted the method of writing off 15% p.a. on the written down value on the balance as appeared in machinery Account on 1-1-2009. Show the machinery account for the calendar year 2006 to 2009. [Loss on sale of first machinery Rs. 60,000;Additional Depreciation Rs.11,919; Depreciation for Last Year Rs.30,837 and Balance on Last year Rs.1,74,744]
  23. Neha limited purchase a second hand machine on 1st January 2008 for Rs. 1,60,000 overheads charges amounted to Rs. 40,000. Another machine was purchase on 1st July. 2008 for Rs. 80,000. On 1st July 2010, the machine installed on 1st January 2008 was sold for Rs. 1,00,000. On the same date another machine was purchased for Rs. 30,000 and was installed on 30th September 2010.
    Under the existing practice the company provides depreciation at 10% on original cost. However from the year 2011, it was decided to adopt W.D.V. method and to charge depreciation at 15% per annum. This change was to be made with retrospective effect. Prepare machinery A/c in the books of Neha Ltd. From 2008 to 2011. [Additional Depreciation Rs.6,916; Depreciation for Last Year Rs.12,351 and Balance on Last year Rs.69,983]
  24. A firm purchased on 1st January, 2008 certain machinery for Rs. 3,88,000 and spent Rs. 12,000 on its erection. On 1st July 2008, an additional machinery costing Rs. 2,00,000 was purchased. On 1st July 2010 the machinery purchased on 1st January 2008, having become obsolete was auctioned for Rs. 2,00,000 and on the same date a new machinery was purchased for Rs. 3,00,000. Depreciation was provided for annually @ 10% p.a. on Original cost of the machinery. No depreciation need be provided when machinery is sold / auctioned. In 2011, the firm changed the method of providing depreciation and adopted the method of writing of 15 % p.a. on written down value method with retrospective effect.Prepare the Machinery Account From 2008-2011. [Additional Depreciation Rs.23,838; Depreciation for Last Year Rs.61,674 and Balance on Last year Rs.3,49,488]
  25. ABC Ltd. purchase on 1st January 2008 second hand plant for Rs. 30,000 and immediately spent Rs. 20,000 of overhauling it, on 1st July, 2008 additional machinery of a cost Rs. 25,000 was purchase. On 1st July 2010, the plant purchased on 1st January 2008 become obsolete and was sold for Rs. 10,000. On that date new machinery was purchased at cost of Rs. 60,000.
    Depreciation was provided at 10% p.a. on the original cost of the assets. In 2011 the company changed this method of providing depreciation on 15% p.a. W.D.V with retrospective effect.
    Show plant and machinery A/c, and provision for depreciation A/c, for the year 2008-2011.[Additional Depreciation Rs. 3,542; Depreciation for Last Year Rs.10,831]
  26. On 1st April, 2008, a new plant was purchased for Rs. 80,000 and a further sum of Rs. 4,000 was spent on its installation . on 1st October, 2010, another plant was acquired for Rs. 50,000. Due to an accident on 3rd January, 2011, the first plant was totally destroyed and was sold for Rs. 2,000 only. On 21st January , 2012, a second hand plant was purchased for Rs. 60,000 and a further sum of Rs. 10,000 was spent for bringing the same to use from 15th March 2012. Depreciation has been provided @ 10% on Straight Lime basis. It was a practice to provide depreciation for full year on all acquisitions made at any time during any year and to ignore depreciation on any item sold and disposed off during the year. None of the assets were insured. The accounts are closed annually on 31st March. It is now decided to follow the rate of 20% on diminishing balance method with retrospective effect in respect of the existing items of plant and to make the necessary adjustment entry on 1st April,2012.You are required to make : (i) Plant Account (ii) Provision for Depreciation Account (iii) Journal Entries, where necessary. Show all the working notes. [Loss on sale of Plant Rs. 62,500 ; Additional Depreciation Rs.15,000]
  27. The Plant and Machinery account of a company had a debit balance of Rs. 1,47,390 on 1-4-2010. The company was incorporated in April 2007 and has been the following the practice of charging full year’s depreciation every year on diminishing Balance method at 15%. In 2010 it was however decided to change the method of depreciation from diminishing to straight line method with retrospective effect from April 2007, and to give effect the change, while preparing the final account for the year ended 31st March 2011, the rate of depreciation remaining same as before. In 2010-11 new Machinery was purchased at a cost of Rs. 50,000. All the other machines were acquired in 2007-08. Show Plant and Machinery Account from the 2007-08 to 2010-11. [Additional Depreciation Rs.15,390; Depreciation for Last Year Rs.43,500 and Balance on Last year Rs.1,38,500]
  28. M/s Hot and Cold commenced business on 1st April 2006 when they purchased a new machinery costing Rs.8,00,000. On 1st October, 2007 they purchased another machinery for Rs.6,00,000 and again on 1st July 2010 machinery costing Rs. 15,00,000 was purchased. They adopted a policy of charging at 20 % p.a. on diminishing balance basis. On April 1, 2010, they, however changed the method of providing depreciation and adopted the method of writing of the machinery account at 15% p.a. under straight line method with retrospective effect from 1st April 2006 the adjustment being made in the account for the year 31st March 2011. Show the Machinery Account for the year ending 31st March, 2011. Show the Machinery Account for the year ending 31st March 2011.[Depreciation written back Rs. 21,720; Depreciation for Last Year Rs. 3,78,750 and Balance on Last year Rs.17,60,000]
  29. Mayur Traders, which depreciates its machinery at 10% p.a. according to Diminishing balance Method, had on 1-1-2009 Rs.4,86,000 balance in Machinery Account. Part of the machinery purchased on 1-1-2007 for Rs. 60,000 was sold for Rs. 40,000 on 1st July 2009 and a new machinery cost of Rs. 70,000 was purchased and installed on the same date, installation charges being R. 70,000 was purchased and installed on the same date, installation charges being Rs. 5,000.Mayur Traders wanted to change its method of depreciation on 1-1-09 from Diminishing balance method to straight line method with effect from 1-1-2007. The rate of depreciation remains the same as before.
    Prepare Machinery Account for the year 2009. Also Show your working clearly. [Additional Depreciation Rs. 5,400; Depreciation for Last Year Rs. 57,750 and Balance on Last year Rs.4,49,250]
  30. Deva Ltd. charged depreciation on its plant and machinery @ 10% per annum on the diminishing balance method. On 31st March 2013, the company decides to adopted straight line method of charging depreciation with retrospective effect from 1st April 2009 the rate of depreciation being 15 % . On 1st April 2012, the plant and machinery account stood in the books at Rs. 2,91,600. On 1st July 2011 a sum of Rs.65,000 was realized by selling a machine cost of which on 1st April 2009 was Rs. 90,000. On 1st January 2013 a new machine was acquired at a cost of Rs. 1,50,000.
    Show the plant and machinery account on the books of the company for the year ended 31st March 2013. [Profit on sale of Machine Rs. 1,030; Additional Depreciation Rs. 55,490; Depreciation for Last Year Rs. 52,125 and Balance on Last year Rs. 2,68,375]
  31. Ahaan Ltd. which depreciates its machinery at 10% p.a. on Diminishing Balance Method, had on 1st April 2011, Rs. 9,72,000 on the debit side of machinery account. During the year 2011-12 machinery purchased on 1st April 2009 for Rs. 80,000 was sold for Rs. 45,000 on 1st October 2011 and a new machinery at a cost of Rs. 1,50,000 was purchased and installed on the same date, installation charges being Rs. 8,000.
    The company wants to change the depreciation method from diminishing balance method to straight line method with effect from 1st April 2009. And adjust the difference in the accounts for the year 2011-12. The rate of depreciation remains the same as before. Show the Machinery Account and Machinery Disposal Account for the Year 2011-12 [Additional Depreciation Rs.11,200; Loss on Sold on Machine Disposal A/c Rs. 16,560; Depreciation for Last Year Rs.1,19,900 and Balance for Last year Rs.9,34,100]
  32. On 1st January, 2011 a company purchased a machinery for Rs. 2,90,000 and spent Rs. 10,000 on Freight and installation. On 1st July 2011, an additional machinery costing Rs. 2,00,000 was purchased. On 1st July 2013 the machinery purchased on 1st January 2011 was auctioned for Rs. 1,50,000. Depreciation was provided @ 10% p.a. on written down value method annually on 31st December. In 2013, the company however changed the method and adopted the method of providing 10% p.a. depreciation on the original cost with retrospective effect. Prepare the Machinery Account From 2011-2013. [Additional Depreciation Rs. 1,000; Depreciation for Last Year Rs. 20,000 and Balance for Last year Rs. 1,50,000]
  33. On 1st January, 2011 a company purchased a machinery for Rs. 5,80,000 and spent Rs. 20,000 on freight and installation. On 1st July 2011, an additional machinery costing Rs.4,00,000 was purchased. On 1st January 2013 the machinery purchased on 1st January 2011 was auctioned for Rs. 3,00,000. Depreciation was provided @ 10% p.a. on written down value method annually on 31st December. In 2013, however, the company decided to change the method of providing depreciation to Straight Line Method with retrospective effect from 2011 with no change in the rate. Prepare the Machinery Account From 2011-2013. [Additional Depreciation Rs.2,000; Depreciation for Last Year Rs.40,000 and Balance for Last year Rs.3,00,000]
  34. X Ltd. commenced business on 1-1-2010, when the company purchased plant and equipment for Rs. 7,00,000. It adopted a policy of
    Charging depreciation at 15% p.a. on diminishing balance basis and
    Charging full years depreciation on additions;
    Over the year its purchase of plant have been: on 1-8-2011 Rs. 1,50,000 and on 30-9-2014 Rs. 2,00,000.
    On 1-1-2014 it was decided to change the methods and rate of depreciation to 10% p.a. on straight line basis with retrospective effect from 1-1-2010, the adjustment being made in the account for the year ending 31-12-2014.
    Calculate the difference in depreciation to be adjusted in the plant and equipment account on 1-1-2014 and show the ledger account for the year 2014. [Depreciation written back Rs. 67,477; Depreciation for Last Year Rs. 1,05,000 and Balance on Last year Rs.6,20,000]
  35. A taxi company Duck and Duckling Ltd. was formed on 1st January 2012. The company depreciates its cars on account @ 20% on reducing balance method. On 1st January, 2014 the balance in Cars account was Rs. 9,00,000. On 1st July, 2014, a car purchased on 1st January 2012, for Rs. 8,00,000 was sold for Rs. 4,50,000. On the same day another car was purchased for Rs. 20,00,000. On 1st January, the company decided to change the method of depreciation to straight line method maintaining the same rate of depreciation. Prepare Cars account with proper working notes for the year ending 31st December, 2014 as per Accounting Standard – 6. [Additional Depreciation Rs.5,30,500; Depreciation for Last Year Rs.28,52,500 and Balance for Last year Rs.71,05,000]
  36. ABC Ltd. purchased on 1st October, 2010, a machinery for Rs. 4,50,000 and spend Rs.10,000 on freight and transit insurance. On 25th December, 2010, it further spent Rs.40,000 on its erection. The Machinery was put to use on 1-1-2011. On 1st July 2011, it purchased another machinery for Rs.1,00,000. During the year 2012, it spent Rs.10,000 for repair on 1-4-2012.However, on 1-4-2013, a part of machinery , purchased on 1-10-2010, costing Rs.2,00,000 was sold for Rs.1,50,000. On 1-10-2013 it purchase another machinery for Rs. 3,00,000 .On 1st July, 2014, however machinery purchased on 1st July, 2011 was sold for Rs.65,000. Depreciation was charged by the firm 10% p.a. by Written Down Value method. During the year 2014, ABC Ltd. decided to change the method of providing depreciation and adopted the Straight Line Method of Charging depreciation @ 10% p.a. Prepare Machinery Account as per provisions of AS-6 up to the year ending 31-12-2014.[Additional Depreciation Rs.8,700; Depreciation for Last Year Rs.60,000 and Balance for Last year Rs.2,62,500]
  37. Akshat Enterprises purchased on 1.4.2007, machine for Rs. 7,28,000 and spent Rs.22,000 on its installation. It purchased anther machinery for Rs. 2,50,000 on 1st October, 2007. On 1st October 2009, the first machinery was sold for Rs.4,50,000. It purchases another machinery on the same date for Rs. 6,00,000. Depreciation was provided annually on 31st March at 10% p.a. on Written Down Value. On 1.4.2010 the firm decided to change the method of providing depreciation and adopted the method of providing depreciation & 10 % p.a. on the original cost with retrospective effect. It decided to make adjustment entry for depreciation on 1.4.2010. Prepare Machinery Account from 1.4.2007 o 31.3.2011[Additional Depreciation Rs. 4,875; Depreciation for Last Year Rs.85,000 and Balance for Last year Rs.6,72,500]
  38. Ajay Purchased on 1st January 2012 certain machinery for Rs. 1,94,000 and spent Rs. 6,000 on its erection. On 1st July 2012 additional machinery costing Rs. 1,00,000 was purchased. On 1st July 2014, the machinery purchased on 1st January 2012 having become obsolete was auctioned for Rs. 1,00,000 and on the same date new machinery was purchased at a cost of Rs. 1,50,000. Depreciation was provided annually on 31st December at the rate of 15% per annum on the W.D.V. of the machinery. No depreciation need be provided when a machinery is sold or auctioned , for that part of the year in which sale or auction took place But for the rest of the machinery, depreciation is provided on time basis . In 2015, however, Ajay changed this method of providing depreciation and adopted the method of writing off 10% p.a. on the on the original cost on the machinery with the effect from 1 jan., 2012. Show the machinery account for the accounting year 2012 to 2015. [Loss on sale of first machinery Rs. 60,000;Additional Depreciation Rs.11,919; Depreciation for Last Year Rs.30,837 and Balance on Last year Rs.1,74,744