DEPRECIATION

1. Madhu and Company purchased a Machinery for Rs. 10,000 on 1.1.2006. It is

depreciated at 10% p.a on straight line method. At the end of the third year, it was
sold for Rs. 6,000. Prepare Machinery account for 3 years assuming that the
accounts are closed on 31st December every year.

2. On April1, 2006 y Limited purchased a second hand machine for Rs. 1,36,000 and
spent Rs. 14,000 on its erection. On October1, 2008 this machine was sold for Rs.
65,000. Prepare machinery account for the first 3 years according to the Reducing
Balance Method. The rate of depreciation is at 10% p.a Assuming that the
accounts are closed on 31st March every year.

3. Ram & Co purchased a Machinery at a cost of Rs. 50,000 on 1.1.2005. On the

machinery 5% depreciation is charged. Show the machinery account for 3 years
under the Diminishing balance method.

4. A firm purchased Machinery worth of Rs. 50,000 on Jan.1. 1995. Its installation
and transport charges are Rs. 5,000. Calculate depreciation @ 10% p.a. under fixed
instalment method. Show the Machinery account for first five years.

5. On 1.1.2000 a firm purchased Machinery costing Rs. 28,500 and spent Rs. 1,500
towards erection charges. On 1.10.2002 the machinery was sold for Rs. 5,000.
Write off depreciation at 10% under diminishing balance method and calculate profit
and loss on sale. Show the machinery account.

6. Ram & Co purchase machinery at a cost of Rs. 50,000 on 1.1.2005. On the

machinery 5% depreciation is charged. Show the machinery account for 3 years
under the diminishing balance method.
7. A second hand machine was purchased for Rs. 12,000 on 1.1.2007 and Rs. 3,000
was spent for its repairs. On 31.12.2009 the machine became unsuitable and was
sold for Rs. 10,000. Charge depreciation @ 10% by the diminishing balance method.
Show the profit or loss on the sale of the machine.

8. A firm purchased machinery worth of Rs. 50,000 on 1.1.2004. Its installation and
transport charges are Rs. 5,000. Calculate depreciation @ 10% per annum under
Fixed Instalment method. Show the machinery account for first five years.

9. A boiler was purchased from abroad for Rs. 30,000. Shipping and forwarding
charges amounted to Rs. 3,000, import duty Rs. 5,000 and installation amounted to
Rs. 2,000. Prepare machinery account for first three years @ 10% p.a. on
diminishing method.

10. On 1.4.2006, Y limited purchased a second hand machine for Rs. 1,36,000 and
spent Rs. 14,000 on its erection. On October1, 2008, this machine was sold for Rs.
65,000. Prepare machinery account for the first 3 years according to the Reducing
balance method. The rate of depreciation is at 10% p.a assuming that the accounts
are closed on 31st March every year.

11. Machinery bought on 1.1.2006 for Rs. 20000 had become outdated and sold out
on 30.6.2008 for Rs. 13000. Draw up machine account and find out profit of loss on
sale of the machine assuming the depreciation is charged at 10% p.a. on striaght
line method.