Beruflich Dokumente
Kultur Dokumente
1. Export Import Ltd financial year closing is 31st December each year. It purchased
the following machinery. On 1st January, 2000 it had purchased a machinery worth Rs.
20,000/-. The company decided to depreciate at 10% on Straight line method on every
year. You are required to show the machinery a/c and depreciation a/c for the
year2000 to 2003.
2. M/s xyz, co. had purchased a machinery on 1.1.98 for Rs. 2,00,000/-. Immediately
it was decided to depreciate the machinery at 15% on Original cost method for every
year. The company’s accounting year is calendar year. On 1st January, 2003 the
company had sold the same machinery for Rs. 1,60,000. You are required to show the
machinery a/c and the depreciation a/c for the year 1998 to 2003.
3. Export Import Ltd financial year closing is 31st December each year. It purchased
the following machinery. On 1st January, 2000 it had purchased a machinery worth Rs.
20,000/-. The company decided to depreciate at 10% on Diminishing Balance method
on every year. You are required to show the machinery a/c and depreciation a/c for the
year2000 to 2003.
4. M/s xyz, co. had purchased a machinery on 1.1.98 for Rs. 2,00,000/-. Immediately
it was decided to depreciate the machinery at 15% on reducing balance method for
every year. The company’s accounting year is calendar year. On 1st January, 2003 the
company had sold the same machinery for Rs. 1,60,000. You are required to show the
machinery a/c and the depreciation a/c for the year 1998 to 2003.
5. From the books of a Limited Company the following particulars regarding its
Machinery are available:
i. Balance on 1.4.1998 Rs. 2,00,000/-
ii. Purchase of new machinery on 1.10.1998 Rs. 80,000/-
iii. Installation charges on the purchase of new machinery Rs. 16,000/-
iv. Sale of machinery on 1.1.1999 Rs. 64,000/-
(The original cost of the machinery sold was Rs. 80,000/- on 1.10.1995)
v. Machinery being depreciated @ 15% p.a. on fixed instalment basis.
vi. The opening balance includes Rs. 1,50,000/- worth machinery purchased on
31.3.1998
Prepare the machinery a/c and Depreciation a/c. in the books of a Ltd. Company.
6. From the Books of M/s OMTEX company the following information are available.
Company’s Financial year closing is 31st December, each year. It purchased the
following machinery.
On 1.4.1996 Machine costing Rs. 30,000
On 1.10.1996 Machine costing Rs. 20,000
On 1.7.1997 Machine costing Rs. 10,000
On 1.1.1998, 1/3 of the Machinery which was installed on 1.04.1996, became
obsolete and was sold for Rs. 3,000/-.The machinery is to be depreciated by a Fixed
Instalment Method at 10% p.a.
Show the Machinery account would appear in the company’s ledger for the years
1996, 1997, 1998.
7. M/s. XYZ Ltd. has imported a machine on 1st July, 1996 for Rs. 80,000 paid
customs duty and freight Rs. 80,000/- and incurred erection charges Rs. 6,000/-.
Another machinery costing Rs. 1.00,000/- was purchased on January,1st 1997. On 1st
OMTEX CLASSES
July, 1998 a portion of the imported machinery (value half) got out of order and was
sold for Rs. 34,800/-. Another machinery was purchased to replace the same for Rs.
50,000/-. Depreciation is to be calculated at 20% p.a. on straight line method. Show
the machinery account for 1996-1998.
8. From the books of M/s. Selvan Ltd. the following particulars regarding its
machinery accounts are available.
a) Balance on January 1,1998 Rs. 25,000/-
b) Purchase of machinery on July 1, 1999 Rs. 10,000/-
c) Sales of machinery on October, 1,1998 Rs. 8,000/-. The original cost of machinery
sold was Rs. 10,000/- on 1st July, 1995.
d) Installation charges of Rs. 2,000/- on the purchase of new machinery.
e) Machinery is being depreciated at 10% per annum on fixed instalment basis.
f) The opening balance includes Rs. 17,500/- worth machinery purchased on 31st
December, 1997.
Prepare “ Machinery Account” in the books of the company”.
10. The Machinery Account in the books of Ramlal shows debit balance of Rs.
15,000/- on 1st January, 1992.
1. On 1st July, 1992 he purchased a machinery costing Rs. 10,000/-
2. On 1.10.1992 he sold out one old machine for Rs. 2,000/- whose book value in the
beginning of the year was Rs. 3000. Machinery is to be depreciated at 10% on
diminishing balance method. Show the machinery a/c for the year ending 31.12.1992.
11. Mahindra Gina Steel Co. Ltd had bought some items of machinery for Rs.
50,000/-
The machinery was depreciated at 10% p.a. on reducing balance system. In the
beginning of the fourth year (the current year) one machine which was obsolete was
disposed off for Rs. 4,000/- its original cost being Rs. 10,000/-
12. M/s M & Co. commenced business on 1st January.1990, when they purchased
plant and equipment for Rs. 7,00,000/- They adopted a policy of _
i. Charging depreciation at 15% per annum on diminishing balance basis and
ii. Charging full year’s depreciation on additions.
Over the years, their purchases of plant have been:
Date Amount (Rs.)
1.8.1991 1,50,000/-
30.9.1994 2,00,000/-
On 1.1.1994, it was decided to change the method and rate of depreciation to
10% on straight line basis with retrospective effect from 1.01.90, the
adjustment being made the account for the year ending 31st December, 1994.
OMTEX CLASSES
Calculate the difference in depreciation to be adjusted in the Plant & Equipment A/c
on 1.01.1994 and show the ledger account for the year 1994.
OMTEX – CLASSES
F.Y.B.Com ACCOUNTS F.Y.B.Com
DEPRECIATION
13. M/s Vaibhav Enterprises purchased a machinery for Rs. 40,000/- on 1st July, 1996.
Depreciation is provided @10% p.a. on Diminishing Balance Method. On 1st October,
1998, one – forth of the machinery was found unsuitable and disposed off for Rs.
5,600/- On the same date new machinery at a cost of Rs. 15,000/- was purchased.
Writer up Machinery Account for the years 1996 - 1998. The accounts being closed on
every 31st December.
14. The Plant and Machinery a/c of a company had a debit balance of Rs. 1,47,390/-
on 1st Jan, 1997. The company was incorporated in 1994 and has been following the
practice of charging full year’s depreciation every year on the W.D.V basis @15%. In
1997, it was, however, decided to change the method from W.D.V method to the
straight lime with retrospective effect from 1994 and to give effect of the change
while preparing the final account for the year ended 31st Dec, 1997, the rate of
depreciation remaining the same as before. In 1997, new machinery were purchased at
a cost of Rs. 50,000/- All the other machineries were acquired in 1994.
Show the Plant & Machinery a/c from, 1994 to 1997.
15. Precaution Limited Depreciated its machinery at 10% p.a. on Fixed instalment
method. On 31st December,1997 the balance in machinery account was Rs. 1,58,000
(Debit) at written down value. Out of this, machinery with original cost of Rs. 25,000
had been purchased on 1st January,1996 The other machinery had been held from
1.1.1994. The company had commenced business from 01.01.1994.
On 1.1.1998 the machinery purchased on 1.1.1996 was sold for Rs. 16,000/-
and a new machinery worth Rs. 23,000 was purchased and installed at a cost of Rs.
1,300.
The Company decided on 31.12.1998 to change the method of Depreciation from
Fixed instalment method to reducing balance method. The rate of depreciation being
10% p.a. under both methods.
Show the machinery account for the year 1998 together with relevant working
notes.
16. On 1.1.97 M/s Ltd. acquired a machine for Rs. 60,000/- The estimated useful life
of the machine was estimated to be 5 years. On 1st Jan 1999, the company revised its
expectation of the life of the asset which was expected to continue for another two
years.
Prepare machinery a/c for 4 years as per AS 6(Revised)
17. M/s LKJ Ltd. purchased a machine costing Rs. 2, 00,000/- on 1st Jan, 1997 with
expected life of 5 years. On 1st Jan, 1999, the company revalued the machine at Rs. 2,
80,000/- and revised its expected life to be two more years. Prepare Machinery A/c for
four years as per AS – 6 (REVISED)
OMTEX CLASSES
• Scrap value: The amount which could be realized from the sale of
used/obsolete of assets it is called scrap value. Scrap value is also known
as residual value.
For e.g. Omtex company purchased an computer for Rs. 25,000/- used for 10
years and sold for Rs. 4,000/- This 4,000 is known as scrap value.
JOURNAL ENTRIES
1. When the assets are purchased
Assets A/c ………………………… Dr.
To cash / bank A/c
Depreciation
No of years x
y
Depreciation
No. of years x
Advantage:
1. The expenses for the use of the assets are scientifically provided.
2. These expenses include depreciation charge for repairs and renewals.
3. The depreciation charges may be higher but the repair and renewal charges
may be lower or the depreciation charges may be lower but the repair and
renewal charges may be higher, thus the profit and loss account is debited
more or less by equal amount each year in this method.
4. This method of depreciation is recognized under the companies act and
income tax act.
Disadvantage:
1. The assets value can never be reduced to Zero in the book.
2. Interest on capital invested in the assets is not considered.
3. If this depreciation is considered for the costing, the cost of production in the
earlier period will be more.
OMTEX CLASSES
STRAIGHT LINE METHOD WRITTEN DOWN VALUE
METHOD
AMOUNT OF DEPRECIATION
1. It remains the same every 1. It goes on reducing every
year. years.
CALCULATED
2. It is charged on original cost 2. It is charged on reducing
of the asset every year balance every year.
3. The amount of depreciation 3. The amount of depreciation
and maintenance increased in and maintenance is equal every
later years. year.
BOOK – VALUE
4. The book value of the assets The book value of the assets
can can never be brought to Zero.
be brought to Zero.
PROFITS
5. Profits are more in the earlier 5. Profits are realistic every
year. years.