do it urself - derpreciation

Depreciation

1. On 1^st January 2005, Machinery was purchased by V.Ltd. for Rs.50,000. On 1^st July 2006; additions were made to the extent of Rs.10,000. On 1^st April 2007; further additions were made to the extent of Rs.6,400.

On 30^th June 2008 ; machinery original value of which was Rs.8,000 on 1^st January 2005 was sold for Rs.6,000. Depreciation is charged at 10% p.a. on original cost.

Show the Machinery account for the years from 2005 to 2008 in the books of V Ltd. V Ltd closes its books on 31^st December every year.

2. Delta Ltd’s financial year closing is 31^st December each year. It purchases the following machinery:

On 1-4-2006 Machinery costing Rs.30,000

On 1-10-2006 Machinery costing Rs.20,000

On 1-7-2007 Machinery costing Rs.10,000

On 1^st January 2008,1/3 of the machinery which has installed on 1^st April 2006 became obsolete and was sold for Rs.3,000. The machinery is to be depreciated by fixed instalment method at 10% p.a.

Show how the machinery account would appear in the company’s ledger for the years 2006,2007 and 2008.

3. On 1^st April 2005; M/S K.& Co. purchased a machinery costing Rs.85,000. The freight, transit insurance and installation expenses amounted to Rs.15,000.

On 31^st December 2005; the company purchased another machinery costing Rs.47,000 and installed the same at cost of Rs.3,000.

On 1^st October 2007 the first machinery was totally damaged due to flood water in the factory. Scrap was taken over by the insurance company and the claim of Rs.40,000 was admitted. On the same day, a second hand machinery was purchased for Rs.1,10,000.The same was immediately repaired for Rs. 40,000. The company provides 20% depreciation on SLM on 31^st December every year.

Prepare necessary ledger accounts.

4. From the following information, Prepare Machinery Account, Provision for Depreciation in the books of a Limited company.

a) Balance on 1^st April 2006: Rs.2,00,000

b) Purchase of new machinery on 1^st October 2006 Rs.80,000

c) Installation charges on the purchase of new Machinery was Rs.16,000.

d) Sale of machinery on 1^st January 2007, Rs.64,000.( The original cost of the machinery sold was Rs.80,000 on 1^st October 2003)

e) Machinery being depreciated @ 15% p.a. on fixed installment basis.

f) The opening balance includes Rs.1,50,000 worth machinery purchased on 31^st March 2006.

5. The following balances appear in the books of M/s.Kushawaha Sons:

1-1-2006 Machinery Account Rs.40,000

Provision for Depreciation Account Rs.18,000

On 1^st January 2006 they decided to sell a machinery for Rs.4,350. The Machine was purchased on January 2002 for Rs.8,000.

You are required to prepare Machinery Account and Provisions for Depreciation Account on 31^st December 2006. Depreciation is charged at 10% p.a. on Straight Line Method.

6. On 1^st April 2005 a firm purchased a machinery for Rs.2,00,000. On 1^st October 2005 additional machinery costing Rs.1,00,000 was purchased. On 1^st October 2006 , the machinery purchased on 1^st April 2005 having became obsolete, was sold forRs.90,000. On 1^st October 2007 , new machinery was purchased for Rs.2,50,000, while the machinery purchased on 1^st October 2005 was sold for Rs.85,000 on the same day. The firm provides depreciation on machinery @ 10% p.a. on original cost on 31^st March every year.

You are required to prepare Machinery Account, Machinery Disposal Account and Provision for Depreciation Account for three years ending 31^st March 2008.