DEPRECIATION QUESTION WITH ANSWER QUESTION NO. 5

OMTEX CLASSES

5. M/s Amol Industries, Pune, purchased machinery for Rs. 19,400 on 1^st January, 1976, and spent Rs. 600 for its erection. On 1^st July 1976, additional machinery costing Rs. 10,000 was acquired. On 1^st July 1978 the machinery purchased on 1^st January, 1976 was sold for Rs. 12,000 and on the same date fresh machinery was purchased at a cost of Rs. 16,000. Depreciation was provided annually on 31^st December at the rate of 10% on the original cost. Give the machinery account and deprecation account for 1976, 1977 and 1978. [F.I.M]

WORKING NOTE : CALCULATION OF DEPRECIATION

Date	Machinery	Machinery 2	Machinery 3	Total depreciation
1.1.76	20000
1.7.76		10000
Depreciation @10%	2000	500		2500
1.1.77	18000	9500
Depreciation @10%	2000	1000		3000
1.1.78	16000	8500
Depreciation @10%	1000			1000
30.6.78/1.7.78	15000
Sold	12000
	3000 Loss
1.7.78			16000
Depreciation @10%		1000	800	1800
1.1.79		7500	15200

M/S ______________________

MACHINERY ACCOUNT

DATE	PARTICULARS	AMOUNT	DATE	PARTICULARS	AMOUNT
1.1.76	To cash / bank account	19400	31.12.76	By depreciation account	2500
1.1.76	To cash/ bank account	600
1.7.76	To cash bank account	10000	31.12.76	By balance c/d	27500
		30000			30000
1.1.77	To balance b/d	27500	31.12.77	By depreciation account	3000
			31.12.77	By balance c/d	24500
		27500			27500
1.1.78	To balance b/d	24500	1.7.78	By depreciation account	1000
1.7.78	To cash/bank account	16000	1.7.78	By cash / bank account	12000
			1.7.78	By profit / loss account	3000
			31.12.78	By depreciation account	1800
			31.12.78	By balance c/d	22700
		40500			40500
1.1.79	To balance b/d