15.

35

ACT E OBLEN
A LP R O B L E M S

(SLM)
aight
A

L i n eM e t h
C T I

ethod

ht
Line
of annual
f ann depreciation and rate of depreciation under
Straight Method
a m o u n t

the Line in eacn

Cat
fthea l t e r n a t i v ec a s e s :
culate

Purchase Price Installation

Estimated Scrap Estimated
ofMachinery Charges Value Useful Life
CAse

(in Years)
20,000
1,80,000
10,000 5
4,75,000 25,000 50,000 5

b 90,000 10,000 20,000 10

3,40,000 60,000 40,000 10
90,000 10,000 20,000 4
rchased machinery for R 21,000 on 1st April, 2019.The estimated useful life of the machinery is
m &C o . p u r c h a .

Gter which its realisable value will be

1 0y e a r s , a f t e r
1,000. Determine the amount of annual depreciation
cording tothe Straight
thes Line Method and prepare Machinery Account for the first three years. The books

are closed on 31st March every year.

ofaccount
1stApri
pril,2019, Raman purchased machineryfor 40,000and spent 5,000 on its instalation. Estimated
Onfe of the machinery is 10 years with a scrap value of T5,000.Calculate depreciation as per Straight
usefulL
Method
and showMachinery Account offirst three years. The books are closed on 31st March every year.
Line

15tApril,2018, Green Ltd. purchased a machinery for R 3,00,000 and incurred 21,000 as freight
4 On
nd insurance, 7 3,000 as carriage inwards and R 6,000 as installation charges. It has estimated that the
and i
machinery will have a scrap value of R 30,000 at the end of the estimated useful life of four years.

Pepare Machinery Account for the first four financial years ended 31st March according to the Straight
epar
Line Method.

On 1st April, 2018, Amrit purchased office furniture for 55,000. It is estimated to have useful life of
10 years at the end of which it can be sold for R 5,000. Additions were made on 1st April, 2019 and
1stOctober, 2021 costing 9,500 andR 8,400 (Residual values T 500 and7 400 respectively).
Prepare Furniture Account for the first four years ended 31st March, if depreciation is written off according
to the Straight Line Method.
From the following transactions of a firm, prepare Machinery Account for the year ended 31st March, 2022:
1st April,2021 : Purchased second-hand machinery for T 40,000.
Tst April, 2021
Spent 10,000 on repairs for making it serviceable.
Suth September, 2021 Purchased additional new machinery for 20,000.

ist December, 2021

Repairs and renewals of machinery 3,000.
31st March, 2022 :Depreciate the machinery at 10% p.a.

April, 2016, A Ltd. purchased a machine for 2,40,000 and spent 10,000 on its installation. On
Ist Octo
ODer, 2016, another machinery costing 1,00,000 was purchased. On 1st October, 2018 the machine
a On 1st April, 2016 was sold for 1,43,000 and on the same date, a new machine was purchased
at a cost
of 2,00,000.
Show Machinery Accour
bunt for the first four financial years after charging depreciation 5% p.a. by the
Straight Line Method.
15.36
Double Entry Book
8. On 1st
on
July, 2017, Sohan Lal & Sons purchased a plant costing 60,000. An
1st
additional pil
January, 2018 for 40.000 and another on 1st October, 2018 for 20,000 plant was
Keeping-1so
one-third of the plant purchased on 1st July, 2017 had become obsolete and n
was sold t. st Apri
Prepare Plant Account for the first three years in the books of Sohan Lal & Sons.
Denroat
Aprt, 20
purchaed
@10% p.a. by Straight Line Method. Accounts are closed on 31st March
every year ciation is cha
9. A Van
On
was purchased on 1st April, 2017 for
60,000 and 5,000 were spent on its renai.. harqe
1st October, 2018, another van was
purchased for R 70,000. On 1st April, 2019, the first egists
1st April, 2017 was sold for 45,000 and a new van costing 1,70,000 was purchased van purchased on
urcha
Prepare Van Account from 1st April, 2017 to 31st March, 2020 charging depreciation
the same o
by Strai datheox
the rate of depreciation charged being 10% p.a. and the books are closed on
31st March Line Met
March every year
10. On 1st July, 2016, A Co. Ltd. purchased second hand machinery for 20,000 and
and spent R3,00
reconditioning and installing it. On 1st January, 2017, the firm purchased new machiner
30th June, 2018, the
3,000
inery of 12,000.
machinery purchased January, 2017 was sold for 8,000
on 1st
and eon 1st
00 and
a fresh plant was installed. Payment for this plant was to be made as follows:
July,;
,2018,
1st July, 2018
30th June, 2019
30th June, 2020
5,000
6,000
Payments in 2019 and 2020 include interest of T 1,000 and 7 500 respectively. S,500
The company writes off 10% on the original cost. The accounts are closed every year on 31st AM-.
Machinery Account for the year ended 31st March, 2019. March. Shov
11. Muskan Traders purchased four machines of 25,000 each
1st July, 2016. On 30th September T.
on

frm sold one of the machine purchased on 1st July, 2016 at a loss
of 2,500. The firm sold another, 017,t
other machine
on 31st December, 2018 at a
of
profit? 3,750. A new machine was purchased on 30th September
31,250. Prepare Machinery Account for 4
years, if books
and depreciation is charged @ 10% p.a. as per Straight Line Method.
ofaccount are closed on
March ecach year
31st

12. M/s. Sharad Bros. purchased machinery on 1st April, 2016 for R 50,000. On 1st October, 2017, ad
dditions
were made of 10,000. On 1st July, 2018, further addition was made
ofT6,400. On 30th September3
machinery the originai value of which 8,000 1st April, 2016, was sold for R 6,000.
was on
Depreciation is
charged @ 10% p.a. on the original cost.
Prepare the Machinery Account for four years ending 31st March, 2020.
13. A firm whose accounting year is a financial year, purchased on 1st July, 2018 machinery for 30.000.t
further purchased machinery on 1st January, 2019 for 20,000 and on 1st October, 2019 for 10,000.
On 1st April, 2020 one-third of the machinery installed on 1st July, 2018 became obsolete and was sold
for 3,000.
Show Machinery Account in the books of the company. Machinery was depreciated by Fixed Instalment
Method @ 10% p.a. What will be the value of Machinery Account on 1st April, 20217
14. Afirmpurchased a second-hand machine on 1st April, 2017 and paidR 1,40,000for it. It spent on its overhauling
and installation 20,000. On 1st October, 2017, another machine costing 80,000 was purchased. On
1st October, 2019, the machine purchased on 1st April, 2017 was sold for 1,04,000 and a new machine
costing 2,00,000 was installed. Depreciation was provided @10% p.a. by the Straight Line Method.Give
the Machinery Account and Depreciation Account for 3 years. Firm's books areclose |on 31st March.
 15.37

018, M Machi
arv Account of Karan shows
balance of 7 96,000
a
2018
chine for 660,000 was purchased and7 (oriqinal cost 7 1,20,000)
p
2 0 1 8 ,
a
9,000 were incurred for its freight and
1 s t

2019, another new machine was

n

t
nstallation
August,

O n1 s t .
1 s t Septem
purchased for 7 50,000 by cheque, but the
on 1st November, 2019.
nctioning
machinestate
Depreciation
Wascharc
ed @10% p.a. by the Straight Line Method. Give the necessary entries in the books
ow Aachinery Account for two years ended 31st March, 2019 and 2020.
oK
f a r aa
nn d s ,

orang AccoUn
of Depreciationb Creating Provisionfor Depreciation Account
atedDepreciatio Account

Acumul exist in
the books ofRama Bros.:
wingbaland
alances
Machinery Account
1 sA
t pril
2021
80,000
Provision for Depreciation Account 36,000
021, they sold a machine for 8,700. This machine was purchased for 16,000 in April, 2017.

1st
oril, 202
A p r i
2
l

reoare Provision for

Depreciation Account and Machinery Account on 31st March,
on requiredt op r e p

a r e
reciation being charged @10% pa. by Straight Line Method.
You

2022,t
balances
in the books
exist ir
exist b a l a n c e s
of XLtd.:
following
Machinery Account
The 1st
April,2021
5,00,000
Provision for Depreciation Account
2,25,000
is
depreciated10% p.a. by the Fixed Instalment
@
Method, the accounting year being
machinery

the 1st October,2021,a

2021 machinery which was purchased on 1st July, 2018 for 1,00,.000 was
On
Apri-March.
date a fresh machine was purchased for 2,00,00o.
and on s
the same
F42,000
for
sold
lachineryAccount andProvision for Depreciation Account for the year 2021-22.
1st April, 2021:
has the
follov ng balances on

ALtd
18 Machinery A c c o u n t
2,00,000
for Depreciation Account 90,000
Provision
ged depreciation
Thecompany charged 10% p.a. as per Straight Line Method. Accounts are closed on

every year.
On 1stOctober,
o 2021 a part of machinery purchased on 1st July, 2018 for 7 40,000
31stMarch
M
ecold for 18,400 and on the same date a new plant was purchased for 1,00,000.
Was sol

Benate 'Machinery Account' and 'Provision for Depreciation Acount for the year ended 31st March, 2022.

itten Down
Value (WDV) Method
19. Good Manufacturers Ltd. purchased on 1st October, 2017 machinery for 25,000. 7 1,000 was spent on
its installation. Depreciation is charged @ 10% p.a. Prepare Machinery Account for 3 years under both the
Fied Instalment and Reducing Instalment Methods of depreciation. The company closes its books every
year on 31st March.

20. Aboiler was purchased from abroadfor 10,000. Shipping and forwarding charges2,000, Customs Duty
7.000 and expenses of installation amounted to R 1,000.
Calculate depreciation for each ofthe first three years@ 10% p.a. as per Diminishing Balance Method.
. Neena Textile Mills purchased on 1st January, 2018 a plant for 8,00,.000. The firm charges depreciation
e 15% pa. according to Written Down Value Method. Prepare the Plant Account for the two years ended
31st March, 2020.
 15.38 Double Entry Book
Keepino
22. A company had purchased machinery for 1,00,000 including a boiler of 10,000. This Mar mg-ISC X1
for the first four years was credited for depreciation on the Reducing Balance Method @10%neyA Nachinery Accoun
ts.TheDuidamaged
ng he
fifth year, ie, the current year, the boiler becomes useless on account of damage to its partt r
boiler is sold for 2,000 which amount is credited to the Machinery Account.
Prepare Machinery Account for the current year, adjusting therein the cash received and the
on the damaged boiler and the depreciation of Machinery for the current year.
the loss sufered
23. Babu purchased on 1st April,2018, a machine for R6,000. On 1st October, 2018, he also Durel
machine for 5,000. On 1st October, 2019, he sold the machine purchased on 1st April, 2018a, pur2018chasedforR4another
4 000.
Depreciation is charged @ 10% p.a. following Diminishing Balance Method.
The accounts were closed on 31st March every year, prepare Machinery Account for
for the
the ccount years
31st March, 2019 and 2020. endended
24. A firm whose books are closed on 31st March each year, purchased a machinery for .
1st April, 2015. Aditional machinery was acquired for R 10,000 on 1st October, 2016. Anitemof
purchased for 10,000 on 1st April, 2015 was sold for R 5,000 on 31st July, 2018.
Prepare the Machinery Account for 4 years ending 31st March, 2019, write off depreciation a

Written Down Value Method.

109% pa.by
25. Xbought a machine for 25,000 on which he spent 5,000 for carriage and freight, 1,00 for
of the middleman, 3,500 for installation and 500 for an iron pad. The machine ic
@10% every year on Written Down Value Basis. After three years, the machine was sold to Ys
brokerage
depred d
and500 were paid as commission to the broker thrOugh whom the sale was effected i 500

gain (proft) or loss on sale of machine.

out he
26. A Ltd. purchased the following machines:

On 1st April, 2016

T40,0
On 1st October, 2016
20.080
On 1st January, 2017
1000
Depreciation was provided @ 10% p.a. under Written Down Value Method (Diminishing Balance Meth.
The machine purchased on 1st October, 2016 was sold on 30th June, 2017 at 7 15,000. Method,
Show necessary ledger accounts in the books of A Ltd. if accounts are closed on 31st March every year

27. Acompany purchased machinery for 50,000 on 1st October, 2017. Another machine costing 10,000Wa
purchased on 1st December, 2018. On 31st March, 2020, the machinery purchased in 2017 was sold ata
loss of T 5,000. The company charges depreciation @15% p.a. by Diminishing Balance Method. Accounte
are closed on 31st March every year.
Prepare Machinery Account for 3 years
28. On 1st January, 2016, Ajit Transport Company purchased a truck for R 4,00,000. On 1st July, 2017, this
truck was involved in an accident and was destroyed and 3,00,000 were received from the Insurance
the company for
Company in full settlement. On the same date another truck was purchased by
Written Down Value Method. Show
5,00,000. The company writes depreciation@20% per annum by
off
the Truck Account for the first three years ending 31st March.
1,80,000 and spent 20,000 on its
machine 1st July, 2016 for
29. Astha Engineering Works purchased a on

installation.
On 1st April, 2017, it purchased another machine for T 2,40,000. On 1st October, 2018, the machine purchased
for R4,0000
on 1st July, 2016 was sold for 1,45,000. On 1st January, 2019, another machine was purchased
Prepare Machinery Account for three years after charging depreciation
10% p.a. by Diminishing Balance
Method. Accounts are closed on 31st Mach every year.
 15.39
40,000 on 1st October,
hased machir ery for
P&0purcha 2017.
MsPA
t h ed i

alance.
m i
On 31st January, 2020,
s t
Ja u n gb

one-fourth
a l a

of the
n
Depreciation is provided @10% p.a. on
500. On
the ame date, new
r
machinery for 15,000 machinery was found unsuitable and
same

purchased. Write up the Machinery

5,60
was
t o r
three years ending 31st March, 2020.
solo
A c c o u nfto r
t h e

was

accounting snfing year is the financial year,

comp0any
whos

purchased on 1stJuly, 2017 machinery costin9

pur ased machinery on 1st
January, 2018 costing
20,000 and on 1st October, 2018
f u r t h e r

A It
30000.
3 .c o s t i n g t1 0 0 0 0

2019, one-third hird of the machinery installed on 1st

O nI s t
A p r i l July, 2017 became obsolete
and was sold
or3000
M a c h i n

Account would appear in the books of

h o w
the

Down Value Method company if depreciation is charged

byWritten
by
Written

Show

p.a.
10% relates to Tit-Bit & Company's
a e following informat

Machinery Account:
Balance of Mach Machinery Account as on 1st April, 2019
purchased on 1st October, 2019 6,00,000
Machinery
2,50,000
2020, a machine,tthe original cost of which was 80,000
On
IstJa (Purchased on 1st July, 2018) wa
was
60,000
for &
sold
Depreciationiwas charge
charged @ 10% p.a. by Diminishing Balance Method.
Show the Machinery Account in the
& Company year ended 31st March, 2020 and
for they
also the position
books ofTit-Bit
to this
asset. of the Balance Sheet
respect
with
1st
tober, 2016, Meenal.
Octot
machine for 7 50,000 on bought a
which he spent 10,000 for
3
On
00 ffor brokerage
2,000 of the
middle-man, 8,000 for installation. The machine carriage
freight;
is depreciated
and
ritten down value basis. On 31st March, 2019 the
machine was sold to Deepa
e 10% poac was Daid
paid as
as commission
commission to broker through whom the
for 761,000
and1,000 sales was effected. Find the
on sale of achine if accounts are sed on 31st March, every year. profit or loss

Accounting) of Depreciation by Creating Provision for Depreciation Account

Depreciation Account
atAcCumulated
are given bllowing balances as on 1st April, 2021:
34. You
Machinery Account

Provision for Depreciation Account

12,50,000
2,90,000
Decreciation is charged on machinery at 20% p.a.by the Diminishing Balance Method.A
piece of machinery
ourchased on 1st April, 2019 for 2,50,000 was sold on 1st
October, 2021 for 1,50,000.
Drecare Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2022.
5. The following balances appear in the books of Satish Bros. on 1st April, 2021:
Machinery Account
T1,00,000
Accumulated Depreciation Account
T 36,000
On 1st April, 2021, they decided to
dispose off a machinery for 8,000 which was purehased on
1stApril, 2018 for 20,000. Prepare Machinery Account and Accumulated
2021-22. Depreciation Account for
Depreciation was charged @ 10% p.a. on Written Down Value basis.
%.On 1st June, 2016, Popular Ltd. purchased a plant forR9,00,000. On 1st
December, 2018, a part of the plant
purchased 1st June, 2016 for
on
1,50,000 was sold for 60,000. On 1st January, 2019 a new plant was
purchased for R 3,00,000.
re closed on
Depreciation is provided @ 10% p.a. by Diminishing Balance Method. The books
31st March
every year. Prepare Plant Account and Provision for Account Depreciation
relevant years. for the
15.40
Double Entry Book
Assets Disposal Account
37.
Keeping-IsC X
Foilowing balances exist in the books of Amrit as on 1st
2019 April, 2019:

1st April
Machinery A/c
Provision for
Depreciation A/c
On 1st April, 2019, they sold a machinery for T 8,400 which was
purchased on 1st April,
April, 2015
You are required to
prepare the Machinery A/c, Provision for
2015 fnfor a

for the year ended 31st Depreciation A/c and

March, 2020. Depreciation was charged at 10% on Cost Machinerv
16.00
38. On 1st October, 2016, X Ltd.
following SLM Disposal AN
purchased machinery for 2,50,000. A part of
purchased for R 20,000 on 1st October, 2016 became obsolete and was sold on 1st
machinerv .
a book value 17,100 on 1st April, 2018) for 7 2,000.
January, 2010. was
down value. Prepare
Depreciation is charged @ 10%
Machinery Disposal Account and also show your workings. The annualy on (having
31st March of every books beina .
written
year. sed on
39. Sharma & Co. whose books closed
are on 31st March, purchased machinery for
2017, additional machinery was acquired 1,50,000 on 1st Apri,
for 50,000 on 1st October, 2017. Certain 0
purchased for 50,000 on 1st October, 2017 was sold for 40,000 on 30th machinery which
September, 2019,
Prepare Machinery Account and Accumulated Depreciation Account for all the
years up to the ye
31st March, 2020. Depreciation is
charged @10% p.a. on cost the year ended
the Machinery Disposal Account.
Straight Line following Method. Aso show
40. On 1st April, 2017, Amit Kumar purchased five machines for 60,000 each. Depreciation @ 10%
pa. on:
cost has been charged from the Proft &Loss Account and
credited to Provision for Depreciation initial
On 1st April, 2018, one machine was sold for T 50,000 and on 1st
Accou
count
April, 2019 another machine was sold s.
50,000. An improved model costing 1,00,000 was purchased on 1st October, 2018. Amit Pro
his books on 31st March each year.
Kumar cdoce es

You are required

show: (i) Machinery Account; (i) Machinery Disposal Account and
to
(ii) Provision for
Depreciation Account for the period of three accounting years ended 31st March, 2020.

Advanced Level Questions

41. A company charges depreciation on Plant and Machinery under Written Down Value Method @ 15% per
annum. On 1st April, 2013 the balance of Plant and Machinery in ledger stood at 4,60,000. Following
particulars are given relating to Plant and Machinery during the four years ended on 31st March, 2017:
1st September, 2013 : Amachine purchased
for R
20,000 (installation expenses 1,000) on 1st
was fully destroyed in an accident.
May,2011
1st July, 2014 Purchased a new machine costing 50,.000 (installation expenses 7 2,500). Asum
of 30,000 was paid on the same date and the balance was paid in May, 2015.
31st August, 2015 :Plant purchased on 1st April, 2012for 30,000 (installation expenses 1,500)was
disposed offfor 36,000.
1st November, 2016 Some old machineries (Book Value on 1st April, 2013-7 10,000) were sold fo
4,000.
Show Plant and Machinery Account as it would appear in the books of the company for the four yed
ended 31st March, 2017 assuming depreciation is charged evenifthe asset is sold or destroyed.
D e y r e c i a t i o n
15.41

Arm imported a machine on 1st October, 2016 for 2,00,000, paid custom duty and freight7 40,000 and
incurred erection charges 60,000. Another machinery costing 1,00,000 was purchased from the local
market on 1st April, 2017.On 1st October, 2018, one-third ofthe imported machinery got out of order and
was sold for 40,000. Another machinery was purchased to replace the same for 50,000 on the same
date. Depreciation is to be charged at 20% per annum on the cost following Straight Line Method.

Accounts are closed each year on 31st March. You are required to show:
)Machinery Account for 2016-17, 2017-18 and 2018-19.
() Machinery Account and Provision for Depreciation Account for 2016-17, 2017-18 and 2018-19.

Scan QR Code for Additional Practical Problems

GUIDE TO ANSWERS
Objective Type Questions
1. Select the correct alternative:
() (a); (Gi) (c): (ii) (b); fihv) (b); (v) (a); (vi) (a); (vi) (b); (vii) (b).

2. State whetherth statements are True or False:

True: (ii); (iv); (v)
False:( vi);
3. Fil-ir riate words:
() d (ii) amount r, estimated useful life; (iv) fluctuation; (v) replacement.

Practi
1 Case (a) ) Case (c) Case (d) Case (e)
ed 38,000 J0 8,000 36,000 20,000
19 8 9 20