Accounting for Depreciation
Question 1:
A Ltd. purchased a machine on 1st July,2024 at a cost of ₹ 14, 00,000 and spent ₹ 1, 00,000 on its installation. The firm writes off depreciation at10% p.a.of the original cost every year. The books are closed on 31st March every year.
You are required to: Show the Machinery Account and Depreciation Account for the year 2024 and 2025.
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Question 2:
Calculate the amount of depreciation and depreciation rate from the following by using ‘Straight Line Method’:
Payment to vendor for purchase of machinery ₹1,00000
Transportation cost ₹ 1,000
Installation Cost ₹ 9,000
Estimated gross scrap value ₹ 12,000
Estimated cost of disposal of asset ₹ 2,000
Estimated life 10 years
Question 3:
On 1-7-2023, X firm purchased second-hand machinery for ₹ 20,000 and spent ₹ 3,000 on reconditioning and installing it. On 1-1-2024, the firm purchased machinery worth ₹ 12,000. On 30-6-2025, the machinery purchased on 1-1-2024, was sold for ₹ 8,000. On 1-7-2025 fresh machinery was purchased on installment basis, payment for the machinery was to be made as follows:
1-7-2025 ₹ 5,000
30-6-2026 ₹ 6,000
30-6-2027 ₹ 5,500
Payments in 2026 and 2027 include interest of ₹ 1,000 and ₹ 500 respectively.
The firm writes off depreciation @ 10% p.a. on original cost. The accounts are closed every year on 31 March.
Show the Machinery Account for the three years ending on 31-3-2026.
Question 4:
A Ltd. purchased on 1st April, 2024 a machinery for ₹ 2,91,000 and incurred ₹ 9000 for installation. On 1st October another machinery for ₹ 1,00,000 was purchased. On 1st October 2025 the machinery purchased on 01/04/2024 having become useless was sold for ₹ 1,93,000 and on that day a new machinery was purchased for ₹ 2,00,000.
Depreciation was provided on 31st March each year @ 10 percent p.a on written Down Value.
You are required to prepare machinery account.
