Read below DK Goel Solutions Class 11 Chapter 16 Depreciation. These answers have been developed based on the latest Class 11 DK Goel Accountancy book used by commerce stream students issued for the current year and the questions given in each chapter.

This chapter of DK Goel accountancy stresses the concepts depreciation with value-based problems. As you are aware that depreciation is charged on all types of assets except land.

Therefore its very important to understand the concepts and accounting process for depreciation so that you can solve all related questions easily. The chapter (DK Goel Solutions Class 11 Chapter 16) also contains a lot of questions which can be very helpful to understand the concepts for Class 11 commerce students of Accountancy and will also help build strong concepts which will be really helpful in your career.

DK Goel Solutions Class 11 Chapter 16 solutions are free and will help you to prepare for Class 11 Accountancy. Just scroll down and read through the answers provided below

Depreciation DK Goel Class 11 Accountancy Solutions

Students can refer below for solutions for all questions given in your DK Goel Accountancy Textbook for Class 11 in Chapter 16

Short Answer Questions for DK Goel Solutions Class 11 Chapter 16 Depreciation

Question 1: Define depreciation. State any two reasons for providing depreciation.

Solution 1: Depreciation may be characterized as a persistent and constant decrease in an asset’s quality, quantity or worth.
The two explanations for offering depreciation are below:—
1.) To calculate the actual benefit or loss from the profit & loss account.
2.) For the balance sheet to reflect the real financial condition.

Question 2: Give four advantages of Straight Line Method of providing depreciation.

Solution 2: The benefits of using the Straight Line Approach are below:
1.) Simplicity
2.) Properties can be written off entirely
3.) Initial expense perception and up-to-date depreciation
4.) Equity of the Burden of Depreciation

Question 3: State four merits of written down value method of providing depreciation.

Solution 3: The merits in using the written down value form are below:—
1.) Quick to measure
2.) Equivalent fee against revenue
3.) In later years, no undue burden
4.) Wealth balance is never written down to zero

Question 4: State two demerits of Reducing Instalment Method of providing depreciation.

Solution 4: Here are the Instalment Reduction Process demerits:—
1.) The commodity cannot be written off entirely.
2.) Interest Factor Exclusion

Question 5: Distinguish between ‘Straight Line Method’ and ‘Written Down Value Method’ of providing depreciation.

Solution 5: Straight Line Method
1.) Per year, the same amount of depreciation is paid.
2.) Depreciation paid in excess to the initial asset value.
3.) The valuation of an asset can be reduced to zero by this approach.
4.) The Income Tax authorities do not approve this process.

Written Down Value Method
1.) Year by year, depreciation will be declining.
2.) The diminished value is paid for depreciation.
3.) By the WDV method, the asset’s value cannot be negative.
4.) This system is licensed by the tax authorities for taxes.

Question 6: Write short note on ‘Original Cost Method’ of providing depreciation with a suitable example.

Solution 6: The original cost approach is known as the straight line method. Depreciation is paid at a fixed percentage of the initial cost of the commodity in this process. The depreciation rate remains the same as the year and the process is also known as ‘Equal Instalments Method’ and ‘Set Instalment Method’ as well. Under this procedure, the deprecation number is determined using the following formula:—
Yearly Depreciation =(Cost of Assets-Scrap Value)/(Estimated life of Asset)

For Example:- A machinery purchased is Rs. 1,00,000 and its scrap value is Rs. 10,000 its estimated life of 10 years, the depreciation will be:-
Annual Depreciation = (Cost of Assets-Scrap Value)/(Estimated life of Asset)
=(1,00,000 – 10,000)/10
=Rs.9,000

Rate of Depreciation =(Amount of Depreciation)/(Total Cost of Asset)×100
=9,000/1,00,000×100
=9%

Question 7: What is asset disposal account? Why is it prepared? Give journal entries for preparation of this account when an asset is disposed off.

Solution 7: It is necessary to open a new account called a “asset disposal account” if any of the asset is sold or disposed of. It offers a straightforward and full view of all the activities involved with the selling of an asset and illustrates the benefit and loss from the sale of the asset.
(i) transfer the book value of asset to Asset disposal account:-
Asset Disposal A/c Dr.
To Asset A/c

(ii) Sale of Asset:-
Bank A/c Dr.
To Asset Disposal A/c

(iii) Profit on sale of asset
Asset Disposal A/c Dr.
To Profit on sale of asset A/c
Or
Loss on sale of asset
Loss on sale of asset A/c Dr.
To Asset Disposal A/c

Practical Questions for DK Goel Solutions Class 11 Chapter 16 Depreciation

Question 1: On 1st April, 2015, a limited company purchased a Machine for Rs. 1,90,000 and spent Rs. 10,000 on its installation. At the date of purchase, it was estimated that the scrap value of the machine would be Rs. 50,000 at the end of sixth year.
Give Machine Account and Depreciation A/c in the books of the Company for 4 years after providing depreciation by Fixed Instalment Method. The books are closed on 31st March every year.

Solution 1:

Working Note:-
1.) Total cost of Machinery = Rs. 1,90,000 + Rs. 10,000 = Rs. 2,00,000

2.) Yearly Depreciation = (Cost of Assets-Scrap Value)/(Estimated life of Asset)
=(2,00,000 -50,000)/6
=Rs.25,000

Rate of Depreciation =(Amount of Depreciation)/(Total Cost of Asset)×100
=25,000/2,00,000×100
=12.5%

Question 2: On 1st April, 2015, a Company bought Plant and Machinery costing Rs. 68,000. It is estimated that its working life is 10 years, at the end of which it will fetch Rs. 8,000. Additions are made on 1st April, 2016 to the value of Rs. 40,000 (Residual value Rs. 4,000). More additions are made on Oct. 1, 2017 to the value of Rs. 9,800 (Break up value Rs. 800). The working life of both the additional Plant and machinery is 20 years.
Show the Plant and Machinery account for the first four years, if depreciation is written off according to Straight Line Method. The accounts are closed on 31st March every year.

Solution 2:

Working Note:-
1.) Annual Depreciation on Machinery 1 = (Cost of Assets-Scrap Value)/(Estimated life of Asset)
=(68,000 – 8,000)/10
=Rs.6,000
2.) Annual Depreciation on Machinery 2 = (Cost of Assets-Scrap Value)/(Estimated life of Asset)
=(40,000 – 4,000)/20
=Rs.1,800

3.) Annual Depreciation on Machinery 3 = (Cost of Assets-Scrap Value)/(Estimated life of Asset)
=(9,800 – 800)/20
=Rs.450
Six month Depreciation = 450 × 6/12 = 225

Question 3: Chandra Ltd. purchased a second-hand machine for Rs. 8,000 plus CGST and SGST @ 6% each on 1st July, 2015. They spent Rs. 3,500 on its overhaul and installation.
Depreciation is written off 10% p.a. on the original cost. On 30th September, 2018, the machine was found to be unsuitable and sold for Rs. 6,500. Prepare the Machinery A/c for four years assuming that accounts are closed on 31st March.

Solution 3:

Working Note:-
Calculation of Value of machinery
Value of machinery = Rs. 8,000 + Rs. 3,500
Value of machinery = Rs. 11,500

Calculation of Profit and Loss:-
Price of Machinery on dated Apr. 01, 2018 = 8,337
Less: Depreciation for 6 months = 11,500 × 10/100×6/12 = 575
Value of Machinery on dated Sept. 30, 2018
= 8,337 – 575
= 7,762
Less: Sale Value = 6,500
Loss on Sale of Machinery = 1,262

Question 4: A Ltd. purchased a machine for Rs. 5,00,000 on 1st April, 2019. Further addition were made on 1st October 2019 and on 1st July 2020 for Rs. 4,00,000 and Rs. 3,00,000 respectively. On 1st January, 2015, 1st machine was sold for Rs. 2,85,000 and new machine was purchased for Rs. 6,00,000.
Prepare Machine A/c for three years ending 31st March, 2015 if depreciation is to be charged @ 10% p.a. on straight line basis.

Solution 4

Question 5: On 1st January, 2016, A Ltd. Purchased a machine for Rs. 2,40,000 and spent Rs. 10,000 on its erection. On 1st July, 2016 an additional machinery costing Rs. 1,00,000 was purchased. On 1st July, 2018 the machine purchased on 1st January, 2016 was sold for Rs. 1,43,000 and on the same date, a new machine was purchased at a cost of Rs. 2,00,000.
Show the Machinery Account for the first three calendar years after charging depreciation at 5% by the Straight Line Method.

Solution 5:

Working Note:-
Calculation of profit and loss:-
Particulars Amount
Value of Machinery on Jan. 01, 2018 2,25,000
Less: Depreciation for 6 months 6,250
Value of Machinery on July 01, 2018 28,750
Less: Sale Value 1,43,000
Loss on Sale Machinery 75,750

Question 6: A company purchased on 1st April, 2009, a machinery for Rs. 80,000. On 1st October, 2016, it purchased another machine for Rs. 50,000 and on 1st October, 2017, it sold off the first machine purchased in 2009 for Rs. 23,000. Depreciation was provided on the machinery at the rate of 20% p.a. on the original cost annually.
Give the Machinery Account for four years commencing from 1st April, 2009.
Accounts are closed on 31st March every year.

Solution 6:

Working Note:-
Calculation of profit and loss:-
Particulars Amount
Value of Machinery on Apr. 01, 2017 48,000
Less: Depreciation for 6 months 8,000
Value of Machinery on Oct. 01, 2017 40,000
Less: Sale Value 23,000
Loss on Sale Machinery 17,000

Question 7: Bhushan & Company purchased a Machinery on 1st April, 2015, for Rs. 54,000 and spent Rs. 6,000 on its installation. On 1st December, 2016, it purchased another machine for Rs. 30,000.
On 30th June 2017, the first machine purchased on 1st April, 2015, is sold for Rs. 36,000 and on the same date it purchased a new machinery for Rs. 80,000.
On December 1, 2018, the second machine (purchased on December 1, 2016) was also sold off for Rs. 26,000.
Depreciation was provided on machinery @ 10% p.a. on Original Cost Method annually on 31st March. Give the machinery account for four years.

Solution 7:

Working Note:-
1.) Calculation of Profit or Loss on Sale on Machinery 1st
Particulars Amount
Value of Machinery on Apr. 01, 2017 48,000
Less: Depreciation for 3 months 1,500
Value of Machinery on June 30, 2017 46,500
Less: Sale Value 36,000
Loss on Sale 10,500

2.) Calculation of Profit or Loss on Sale on Machinery 2nd
Particulars Amount
Value of Machinery on Apr. 01, 2018 26,000
Less: Depreciation for 8 months 2,000
Value of Machinery on Dec. 01, 2018 24,000
Less: Sale Value 26,000
Profit on Sale 2,000

Question 8: On 1st October, 2009, Raj & Co. purchased machinery worth Rs. 40,000. On 1st October, 2017, it buys additional machinery worth Rs. 10,000. On 30th September, 2019, half of the machinery purchased on 1st Oct., 2009, is sold for Rs. 8,200. The company writes off 10 per cent p.a. on the original cost. The accounts are closed every year on 31st March.
Show the Machinery Account for four years.

Solution 8:

Machinery Account

Working Note:-
1.) Calculation of Profit and Loss on sale of Machinery 1st:-
Particulars Amount
Value of Machinery on Apr. 01, 2019 15,000
Less: Depreciation for 6 months 1,000
Value of Machinery Sept. 30, 2019 14,000
Less: Sale Value 8,200
Loss on Sale 5,800

Question 9: On 1st April, 2016, Plant and Machinery was purchased for Rs. 1,20,000. New machinery was purchased on 1st Oct., 2016, for Rs. 50,000 and on 1st July, 2017, for Rs. 25,000.
On 1st January, 2020, a machinery of the original value of Rs. 20,000 which was included in the machinery purchased on 1st April, 2016, was sold for Rs. 6,000. Prepare Plant & Machinery A/c for three years after providing depreciation at 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year.

Solution 9:

Working Note:-
Calculation of Profit and loss:-
Particulars Amount
Value of Machinery on Apr. 01, 2019 16,000
Less: Depreciation for 9 months 1,500
Value of Machinery on Jan.01, 2020 14,500
Less: Sale Value 6,000
Loss on Sale of Machinery 8,500

Question 10: From the following transactions of a concern, prepare Machinery Account for the year ending 31st March, 2020 :-
2019
April 1 : Purchased a second-hand machinery for Rs. 40,000.
April 1 : Spent Rs. 10,000 on repairs for making it serviceable.
Sept. 30 : Purchased additional new machinery for Rs. 20,000.
Dec. 31 : Repairs and renewals of machinery Rs. 2,000.
2020
March 31 : Depreciate the machinery at 10% p.a.

Solution 10:

Question 11: A plant is purchased for Rs. 60,000 on 1st April, 2009. It is estimated that the residual value of this plant at the end of its working life of 10 years will be Rs. 20,920. Depreciation is to be provided at 10% p.a. on diminishing balance method.
You are required to show the Plant Account for 4 years, assuming that the books are closed on 31st March every year.

Solution 11:

Question 12:
A Company purchased a second-hand machine on 1st April, 2016, for Rs. 30,000 and immediately spent Rs. 4,000 on its repair and Rs. 1,000 on its installation. On Oct. 1, 2018, the machine was sold for Rs. 25,000. Prepare Machine Account after charging depreciation @ 10% p.a. by diminishing balance method, assuming that the books are closed on 31st March every year. IGST was charged @ 12% on purchase and sale of machine.

Solution 12:

Working Note:-
Total Value of Machinery = 30,000 + 4,000 + 1,000 = 35,000
Calculation of Profit and loss:-
Particulars Amount (Rs.)
Value of Machinery on Apr. 01, 2018 28,350
Less: Depreciation for 6 months 1,418
Value of Machinery on Oct. 01, 2018 26,932
Less: Sale Value 25,000
Loss on Sale of Machinery 1,932

Question 13: A firm purchased on 1st April, 2009, a second-hand Machinery for Rs. 36,000 and spent Rs. 4,000 on its installation. On 1st Oct. in the same year another Machinery costing Rs. 20,000 was purchased. On 1st Oct., 2017, the Machinery bought on 1st April, 2009 was sold off for Rs. 12,000 and on the same date a fresh Machine was purchased for Rs. 64,000. Depreciation is provided annually on 31st March, @ 10% p.a. on the Written Down Value Method. Show the Machine A/c from 1st April, 2009 to 31st March, 2020.

Solution 13:

Machinery Account

Question 14: A Company purchased a machinery for Rs. 50,000 on 1st Oct., 2016. Another machinery costing Rs. 10,000 was purchased on 1st Dec., 2017. On 31st March, 2019, the machinery purchased in 2016 was sold at a loss of Rs. 5,000. The Company charges depreciation at the rate of 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year.
Prepare Machinery account for 3 years.

Solution 14:

Working Note:-
Calculation of Profit and Loss on Sale of Machinery:-
Value of Machinery on Apr. 01, 2018 39,312
Less: Depreciation for 12 months 5,897
Value of Machinery on Mar. 31, 2019 33,415
Less: Loss on Sale (given) 5,000
Sale Value (Balancing Figure) 28,415

Question 15: Ashoka Ltd. bought a machine on 1st April, 2016 for Rs. 2,40,000 and spent Rs. 4,000 on its carriage and Rs. 6,000 towards installation cost. On 1st July, 2017 it purchased a second hand machinery for Rs. 75,000 and spent Rs. 25,000 on its overhauling.
On 1st January, 2019 it decided to sell the machinery bought on 1st April, 2016 at a loss of Rs. 20,000. It bought another machine on the same date for Rs. 40,000. Company decided to charge depreciation @ 15% p.a. on written down value method. Prepare machinery account for 3 years. Books are closed each year on 31st March.

Solution 15:

Working Note:-
Value of Machine 1
= Rs. 2,40,000 + Rs. 4,000 + Rs.6,000
= Rs. 2,50,000

Value of Machine 2
= Rs. 75,000 + Rs. 25,000
= Rs. 1,00,000

Point in mind:-
(i) In order to calculate the right benefit or loss, the profit for each year will only be calculated after all the costs of receiving profits have been compensated for. The reduction in the valuation of real assets or depreciation represents the cost of collecting income in the financial year on the basis of the usage of fixed assets. To assess right benefit or loss, depreciation is neither optional nor mandatory.

(ii) Giving a real and realistic understanding of the financial situation: depreciation, if not paid, will result in a higher valuation of the properties. As a consequence of this, an accurate and realistic view of the financial situation will not be reflected in the position statement or balance sheet.

Question 16: The Sameer Transport Company purchased 10 Trucks at Rs. 90,000 each on 1st April 2017. On 1st October 2019 one of the Trucks was involved in an accident and is completely destroyed. Rs. 56,200 was received from the Insurance company in full settlement. On the same date another truck was purchased by the company for the sum of Rs. 1,00,000. The company writes off 20% per annum on the Diminishing Balance Method. The company maintains the calendar year as its financial year. Show the Truck Account for four years ending 31st December, 2014.

Solution 16:

Working Note:-
Calculation of Profit and Loss on Sale of T1:-
Value of Truck on Jan. 01, 2019 61,200
Less: Depreciation for 9 months 9,180
Value of Truck on Oct. 01, 2019 52,020
Less: Sale Value 56,200
Profit on Sale 4,180

Question 17: Raja Textiles Co. which closes its books on 31st March, purchased a machine on 1-4-2009 for Rs. 50,000. On 1-10-2016, it purchased an additional machine for Rs. 30,000. The part of the machine which was purchased on 1-4-2009 costing Rs. 10,000 was sold for Rs. 3,600 on 30th Sept., 2018. Prepare the Machine Account for four years, if the depreciation is provided at the rate of 10% p.a. on Diminishing Balance Method.

Solution 17:

Working Note:-
Calculation of Profit and Loss on Sale of T1:-
Value of Machinery on Apr. 01, 2018 7,290
Less: Depreciation for 6 months 365
Value of Machinery on Sept.30, 2018 6,925
Less: Sale Value 3,600
Loss on Sale of machinery 3,325

Question 18:
A Company, which closes its books on 31st March every year, purchased on 1st July, 2016, machinery costing Rs. 30,000. It purchased further machinery on 1st January, 2017, costing Rs. 20,000 and on 1st October, 2017, costing Rs. 10,000. On 1st April, 2018, one-third of the machinery installed on 1st July, 2016, became obsolete and was sold for Rs. 3,000.
Show how the machinery account would appear in the books of the Company, it being given that machinery was depreciated by Diminishing Balance Method at 10% per annum. What would be the balance of Machinery Account on 1st April, 2019?

Solution 18:

Working Note:-
Calculation of Profit and loss on Sale of assets:-
Value of Machinery on Apr. 01, 2018 8,325
Less: Sale Value 3,000
Loss on Sale 5,325

Question 19: On July 1, 2016 Pushpak Ltd. purchased a machinery for Rs. 5,70,000 and paid Rs. 30,000 for its overhauling and installation. Depreciation is provided @ 20% p.a. on Original Cost Method and the books are closed on 31st March every year. The machine was sold on 31st January 2019 for a sum of Rs. 1,60,000. You are required to show the Machinery Account and Provision for Depreciation Account for three years.

Solution 19:

Working Note:-
Value of Machinery
= Rs. 5,70,000 + Rs. 30,000
= Rs. 6,00,000

Question 20: On 1st April 2008, a Company purchased 6 machines for Rs. 50,000 each. Depreciation at the rate of 10% p.a. is charged on Straight Line Method. The accounting year of the Company ends on 31st March and the depreciation is credited to a separate ‘Provision for Depreciation Account’.
On 1st October, 2016, one machine was sold for Rs. 30,000 and on 1st April, 2017 a second machine was sold for Rs. 24,000.
You are required to prepare Machinery Account and Provision for Depreciation Account for four years ending 31st March, 2018.

Solution 20:

Working Note:-
Value of Machinery 1
= Rs. 5,000 + Rs. 5,000 + Rs. 2,500
= Rs. 12,500

Value of Machinery 2
= Rs. 5,000 + Rs. 5,000 + Rs. 5,000
= Rs. 15,000

Calculation of Profit and loss on sale of machinery 1:-
Particulars Amount
Value of Machinery on Apr. 01, 2008 50,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2009 45,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2016 40,000
Less: Depreciation for 6 months 2,500
Value of Machinery on Oct. 01, 2016 37,500
Less: Sale Value 30,000
Loss on Sale 7,500

Calculation of Profit and loss on sale of machinery 2:-
Particulars Amount
Value of Machinery on Apr. 01, 2008 50,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2009 45,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2016 40,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2017 35,000
Less: Sale Value 24,000
Loss on Sale 11,000

Question 21: On 1st July 2015, ABC Ltd. purchase 4 machines for Rs. 80,000 each. The accounting year of the company ends on 31st March every year. Depreciation is provided at the rate of 15% p.a. on original cost.
On 1st April, 2017 one machine was sold for Rs. 50,000 and on 1st January, 2019 a second machine was sold for Rs. 40,000. Another machine with a higher capacity which cost Rs. 2,00,000 was purchased on 1st January, 2019.
You are required to show: (i) Machinery Account, (ii) Depreciation Account, and (iii) Provision for Depreciation Account for four years ending 31st March, 2019.

Solution 21:

Working Note:-
Profit and loss on Sale of Machinery 1:-
Particulars Amount
Value of Machinery on July 01, 2015 80,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Apr. 01, 2016 71,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2017 59,000
Less: Sale Value 50,000
Loss on Sale 9,000

Profit and loss on Sale of Machinery 2:-
Particulars Amount
Value of Machinery on July 01, 2015 80,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Apr. 01, 2016 71,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2017 59,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2018 47,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Jan. 01, 2019 38,000
Less: Sale Value 40,000
Profit on Sale 2,000

Question 22: X Ltd. which closes its books of account every year on 31st March, purchased on 1st October, 2017 machinery costing Rs. 4,40,000. It purchased further machinery on 1st April, 2018 costing Rs. 5,20,000. On 30th June, 2019, the first machine was sold for Rs. 2,50,000 and on the same date a fresh machine was installed at a cost of Rs. 3,00,000. On 1st July 2014, the second machine purchased on 1st April 2018 was also sold for Rs. 3,25,000.
The company writes off depreciation at 10% p.a. on the Straight Line Method each year. Show the Machinery A/c, Depreciation A/c and Provision for Depreciation A/c for all the four years.

Solution 22:

Working Note:-
Value of Machinery 1
= Rs. 22,000 + Rs. 44,000 + Rs. 11,000
= Rs. 77,000

Value of Machinery 2
= Rs. 52,000 + Rs. 52,000 + Rs. 13,000
= Rs. 1,17,000

Profit and Loss on Sale of Machinery 1:-
Particulars Amount
Value of Machinery on Oct. 01, 2017 4,40,000
Less: Depreciation for 6 months 22,000
Value of Machinery on Apr. 01, 2018 4,18,000
Less: Depreciation 44,000
Value of Machinery on Apr. 01, 2019 3,74,000
Less: Depreciation for 3 months 11,000
Value of Machinery on June 30, 2019 3,63,000
Less: Sale Value 2,50,000
Loss on Sale 1,13,000

Profit and Loss on Sale of Machinery 2:-
Particulars Amount
Value of Machinery on Apr. 01, 2018 5, 20,000
Less: Depreciation 52,000
Value of Machinery on Apr. 01, 2019 4, 68,000
Less: Depreciation 52,000
Value of Machinery on Apr. 01, 2014 4, 16,000
Less: Depreciation for 3 months 13,000
Value of Machinery on June 30, 2014 4,03,000
Less: Sale Value 3,25,000
Loss on Sale 78,000

Question 23: A company purchased second-hand machinery on 1st May, 2009 for Rs. 5,85,000 and immediately spent Rs. 15,000 on its erection. On 1st October, 2016, it purchased another machine for Rs. 4,00,000. On 31st July, 2017, it sold off the first machine for Rs. 2,50,000 and bought another for Rs. 4,20,000. On 1st November, 2018, the second machine was also sold off for Rs. 3,00,000. Depreciation was provided on the machinery @ 15% p.a. on Equal Instalment Method.
Show the Machinery Account, Depreciation Account and Provision for Depreciation Account assuming that the books are closed on 31st March every year.

Solution 23:

Question 24: X Ltd. purchased a plant on 1st July, 2016 costing Rs. 5,00,000. It purchased another plant on 1st September, 2016 costing Rs. 3,00,000. On 31st December, 2018, the plant purchased on 1st July, 2016 got out of order and was sold for Rs. 2,15,000. Another plant was purchased to replace the same for Rs. 6,00,000. Depreciation is to be provided at 20% p.a. according to Writen Down Value Method. The accounts are closed every year on 31st March.
Show the Plant Account and Provision for Depreciation Account.

Solution 24:

Working Note:-
Calculation of Profit and Loss on Sale of Machinery 1:-
Particulars Amount
Value of Plant on July 01, 2016 5,00,000
Less: Depreciation for 9 months 75,000
Value of Plant on Apr. 01, 2017 4,25,000
Less: Depreciation 85,000
Value of Plant on Apr. 01, 2018 3,40,000
Less: Depreciation for 9 months 51,000
Value of Plant on Dec. 31, 2018 2,89,000
Less: Sale Value 2,15,000
Loss on Sale 74,000

Question 25: On 1st August, 2016, Hindustan Toys Ltd. purchased a plant for Rs. 12,00,000. The firm writes off depreciation at 10% p.a. on the diminishing balance and the books are closed on 31st March each year. On 1st July, 2018, a part of this plant of which the original cost was Rs. 1,80,000 was sold for Rs. 1,00,000 and on the same date a new plant was purchased for Rs. 4,00,000. Show the Plant Account and Provision for Depreciation Account for three years ending 31st March, 2019.

Solution 25:

Working Note:-
Calculation of Profit and Loss on Sale of Plant and Machinery 1:-
Particulars Amount
Value of Plant on Aug. 01, 2016 1,80,000
Less: Depreciation for 8 months 12,000
Value of Plant on Apr. 01, 2017 1,68.000
Less: Depreciation 16,800
Value of Plant on Apr. 01, 2018 1,51,200
Less: Depreciation for 3 months 3,780
Value of Plant on July 01, 2018 1,47,420
Less: Sale Value 1,00,000
Loss on Sale 47,420

Question 26: On 1st April 2018, Banglore Silk Ltd. purchased a machinery for Rs. 20,00,000. It provides depreciation at 10% p.a. on the Written Down Value Method and closes its books on 31st March every year. On 1st July 2014, a part of the machinery purchased on 1st April 2018 for Rs. 4,00,000 was sold for Rs. 3,20,000. On 1st November 2014, a new machinery was purchased for Rs. 4,80,000. You are required to prepare Machinery Account, Depreciation Account and Provision for Depreciation Account for three years ending 31st March 2015.

Solution 26:

Question 27: Binny Textiles Ltd. which depreciates its machinery at 20% p.a. on diminishing balance method, purchased a machine for Rs. 6,00,000 on 1st October, 2016. It closes its books on 31st March every year. On 1st January, 2018, it purchased another machine for Rs. 1,50,000. On 1st December, 2018, one-third of the machinery purchased on 1st October, 2016 was sold for Rs. 80,000.
You are required to prepare Machinery A/c and Provision for Depreciation A/c for the relevant years.

Solution 27:

Working Note:-
Calculation of Profit and Loss on sales of Machinery 1:-
Particulars Amount
Value of Machinery on Oct. 01, 2016 2,00,000
Less: Depreciation for 6 months 20,000
Value of Machinery on Apr. 01, 2017 1,80,000
Less: Depreciation 36,000
Value of Machinery on Apr. 01, 2018 1,44,000
Less: Depreciation for 8 months 19,200
Value of Machinery on Dec. 01, 2018 1,24,800
Less: Sale Value 80,000
Loss on Sale 44,800

Question 28: The following balances appear in the books of Y Ltd:
Rs.
Machinery A/c as on 1-4-2014 8,00,000
Provision for Depreciation A/c as on 1-4-2014 3,10,000
On 1-7-2014, a machinery which was purchased on 1-4-2017 for Rs. 1,20,000 was sold for Rs. 50,000 and on the same date another machinery was purchased for Rs. 3,20,000.
The firm has been charging depreciation at 15% p.a. on Original Cost Method and closes its books on 31st March every year. Prepare the Machinery A/c and Provision for Depreciation A/c for the year ending 31st March 2015.

Solution 28:

Working Note:-
Value of Machinery
= Rs. 6,80,000 + Rs. 1,20,000
= Rs. 8,00,000

Calculation of Profit and Loss on Sale of machinery:-
Particulars Amount
Value of Machinery on Apr. 01, 2017 1,20,000
Less: Depreciation for 3 Years 3 months 58,500
Value of Machinery July 01, 2014 61,500
Less: Sale Value 50,000
Loss on Sale 11,500

Calculation of Depreciation:-
Rs. 6,80,000 × 15% = Rs. 1,02,000

Rs. 1,20,000 × 15% × 3/12 = Rs. 4,500

Rs. 1,20000 × 15% × 9/12 = Rs. 36,000

Question 29: On 1st April, 2018, following balances appeared in the books of M/s Krishna Traders:
Rs.
Furniture Account 50,000
Provision for Depreciation on Furniture Account 22,000
On 1st October, 2018 a part of Furniture purchased for Rs. 20,000 on 1st April, 2014 was sold for Rs. 5,000. On the same date a new furniture costing Rs. 25,000 was purchased.
The depreciation was provided @ 10% p.a. on original cost of the asset and no depreciation was charged on the asset in the year of sale. Prepare ‘Furniture Account’ and ‘Provision for Depreciation Account’ for the year ending 31st March, 2019.

Solution 29:

Working Note:-
Value of Machinery = Rs. 30,000 + Rs. 20,000 = Rs. 50,000

Calculation of Profit and Loss on Sale of Machinery:-
Particulars Amount
Value of Furniture on Apr. 01, 2014 20,000
Less: Depreciation for 4 Years @ 10% 8,000
Value of Furniture on Oct. 01, 2018 12,000
Less: Sale Value 5,000
Loss on Sale 7,000

Question 30: Books of Mumbai Chemicals Ltd. showed the following balances on 1st April 2018:
Machinery A/c Rs. 10,00,000
Provision for Depreciation A/c Rs. 4,05,000
On 1st April, 2018, a machine which had a cost of Rs. 2,00,000 on 1st October, 2009 was sold for Rs. 80,000. The firm writes off depreciation @ 10% p.a. under the Reducing Balance Method and its accounts are made up on 31st March each year. You are required to prepare the Machinery A/c and Provision for Depreciation A/c for the year ending 31st March, 2019.

Solution 30:

Working Note:-
Calculation of Profit and Loss on sale of machinery:-
Particulars Amount
Value of Machinery on Oct. 01, 2009 2,00,000
Less: Depreciation for 6 months 10,000
Value of Machinery on Apr. 01, 2016 1,90,000
Less: Depreciation 19,000
Value of Machinery on Apr. 01, 2017 1,71,000
Less: Depreciation 17,100
Value of Machinery on Apr. 01,2018 1,53,900
Less: Sale Value 80,000
Loss on Sale 73,900

Question 31: On 1st July, 2016, X Ltd. purchased a machinery for Rs. 15,00,000. Depreciation is provided @ 20% p.a. on the original cost of the machinery and books are closed on 31st March each year. On 31st May, 2018, a part of this machine purchased on 1st July 2016 for Rs. 3,60,000 was sold for Rs. 2,40,000 and on the same date new machinery was purchased for Rs. 4,20,000. You are required to prepare (a) Machinery Account, (b) Provision for Depreciation Account, and (c) Machinery Disposal Account.

Solution 31:

Working Note:-
Calculation of Profit and Loss on Sale of Machinery:-
Particulars Amount
Value of Machinery on July 01, 2016 3,60,000
Less: Depreciation for 9 months 54,000
Value of Machinery on Apr. 01, 2017 3,06,000
Less: Depreciation 72,000
Value of Machinery on Apr. 01, 2018 2,34,000
Less: Depreciation for 2 months 12,000
Value of Machinery on May 31, 2018 2,22,000
Less: Sale Value 2,40,000
Profit on Sale 18,000

Question 32: On 1st September 2017, Gopal Ltd. purchased a plant for Rs. 10,20,000. On 1st July 2018 another plant was purchased for Rs. 6,00,000. The firm writes off depreciation @ 10% p.a. on original cost and its accounts are closed every year on 31st March. On 1st October 2014, a part of the second plant purchased on 1st July 2018 for Rs. 1,80,000 was sold for Rs. 1,10,000. On 1st December 2014, another plant was purchased for Rs. 3,00,000.
Prepare Plant Account, Provision for Depreciation Account and Plant Disposal Account.
Solution 32:

Point in Mind:-
Amount on Annual Depreciation under Fixed Instalment Method:-
= (Amount to be Depreciated)/(Number of year of life of Machine)

= (Cost Price-Scrap Value)/(Number of year of life of Machine)

Question 33: On 1st June, 2016, Kedarnath Ltd. purchased a machinery for Rs. 27,00,000. Depreciation is provided @ 10% p.a. on diminishing balance method and the books are closed on 31st March each year. On 1st October, 2018, a part of the machinery purchased on 1st June, 2016 for Rs. 6,00,000 was sold for Rs. 3,50,000 and on the same date another machinery was purchased for Rs. 8,00,000. You are required to show (i) Machinery A/c, (ii) Provision for Dep. A/c, and (iii) Machinery Disposal A/c.
Solution 33:

Working Note:-
Calculation of Profit and loss on Sale of machinery:-
Particulars Amount
Value of Machinery on June 01, 2016 6,00,000
Less: Depreciation @ 10% for 10 months 50,000
Value of Machinery on Apr. 01, 2017 5,50,000
Less: Depreciation @ 10% 55,000
Value of Machinery on Apr. 01, 2018 4,95,000
Less: Depreciation @ 10% for 6 months 24,750
Value of Machinery on Oct. 01, 2018 4, 70,250
Less: Sale Value 3,50,000
Loss on Sale Machinery 1,20,250

Point in Mind:-
Amount on Annual Depreciation under Straight Line Method:-
= (Amount to be Depreciated)/(Number of year of life of Machine)

Question 34: On 1st Jan. 2018, Panjim Dryfruits Ltd. bought a plant for Rs. 15,00,000. The company writes off depreciation @ 20% p.a. on Written Down Value Method and closes its books on 31st March every year. On 1st Oct. 2014, a part of the plant purchased on 1st Jan. 2018 for Rs. 3,00,000 was sold for Rs. 1,75,000. On 1st Jan. 2015 a fresh plant was purchased for Rs. 5,00,000. Prepare Plant A/c, Provision for Dep. A/c and Plant Disposal A/c.
Solution 34:

Working Note:-
Particulars Amount
Value of Plant on Jan. 01, 2018 3,00,000
Less: Depreciation for 3 months 15,000
Value of Plant on Apr. 01, 2018 2,85,000
Less: Depreciation 57,000
Value of Plant on Apr. 01, 2019 2,28,000
Less: Depreciation 45,600
Value of Plant on Apr. 01, 2014 1,82,400
Less: Depreciation for 3 months 18,240
Value of Plant on Oct. 01, 2014 1,64,160
Less: Sale Value 1,75,000
Profit on Sale 10,840

Question 35: The following balances appear in the books of M/s Amrit:
1st April, 2018 Machinery A/c 60,000
1st April, 2018 Provision for depreciation A/c 36,000
On 1st April, 2018, they decided to dispose off a machinery for Rs. 8,400 which was purchased on 1st April, 2014 for Rs. 16,000.
You are required to prepare Machinery A/c, Provision for Depreciation A/c and Machinery Disposal A/c for 2018-19. Depreciation was charged at 10% p.a on original cost method.

Solution 35:

Working Note:-
Particulars Amount
Value of Furniture on Apr. 01, 2014 16,000
Less: Depreciation for 4 years @ 10% p.a. 6,400
Value of Furniture on Apr. 01, 2018 9, 600
Less: Sale Value 8,400
Loss on Sale of Furniture 1,200

Question 36: A limited company purchased on 01-01-2017 a plant for Rs. 38,000 and spent Rs. 2,000 for carriage and brokerage. On 01-04-2018 it purchased additional plant costing Rs. 20,000. On 01-08-2019 the plant purchased on 01-01-2017 was sold for Rs. 25,000. On the same date, the plant purchased on 01-04-2018 was sold at a profit of Rs. 2,800. Depreciation is provided @10% per annum on diminishing balance method every year. Accounts are closed on 31st December every year. Show the plant A/c for 3 years.

Solution 36:

Working Note:-
Calculation of Profit and Loss on Sale of Plant 1:-
Particulars Amount
Value of Plant on Apr. 01, 2019 32,400
Less: Depreciation for 7 months 1,890
Value of Plant on Aug. 01, 2019 30,510
Less: Sale Value 25,000
Loss on Sale 5,510

Calculation of Profit and Loss on Sale of Plant 2:-
Particulars Amount
Value of Plant on Apr. 01, 2019 18,500
Less: Depreciation for 7 months 1,080
Value of Plant on Aug. 01, 2019 17,420
Add: Profit on Sale 2,800
Sale Value 20,220

Question 37: A Limited purchased a machine on 1st July 2017 for Rs. 3,00,000 and on 1st January 2019 bought another machinery for Rs. 2,00,000. On 1st August 2019 machine bought in 2017 was sold for Rs. 1,60,000. Another machine was bought for Rs. 1,50,000 on 1st October 2019. It was decided to provide depreciation @ 10% p.a. on written down value method assuming books are closed on 31st March each year. Prepare Machinery Account and Provision for depreciation account for 3 years.

Solution 37:

Working Note:- (DK Goel Solutions Class 11 Chapter 16 Depreciation)
Calculation of Profit and Loss:-

Question 38: On April 01, 2016 Jain & Sons purchased a second hand plant costing Rs. 2,00,000 and spent Rs. 10,000 on its overhauling. It also spent Rs. 5,000 on transportation and installation of the plant. It was decided to provide for depreciation @ 20% on written down value. The plant was destroyed by fire on Oct. 31, 2019 and an insurance claim of Rs. 50,000 was admitted by the insurance company. Prepare plant account assuming that the company closes its books on March 31, every year.
Solution 38:

Working Note:-
Calculation of Profit and Loss:-

Point of Knowledge:-
(i) Asset disposition account: in the event of the selling of an asset. For the purposes of measuring benefit or loss on the disposition of an asset, a new account called ‘Asset Disposal Account’ is opened in the ledger. Journal entries for asset purchases or disposition will depend on the depreciation tracking process.
(ii) Written Down Value/Decreasing Balance/Reducing Balance Depreciation Billing Process: In this method, depreciation is paid yearly at a set rate on the decreasing balance or costs less depreciation. A fixed rate on the asset’s written down value is paid as a depreciation of the asset’s estimated useful life per year.