DK Goel Solutions Chapter 16 Depreciation

DK Goel Accountancy Class 11 Solutions Chapter 16 Depreciation which is outlined by expert Accountancy teachers from the latest version of DK Goel Class 11 Accountancy books. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. There are numerous concepts in Accountancy, but the concepts of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required.

DK Goel Accountancy Class 11 Solutions – Chapter 16

Question 1

Mention the methods of providing or allocating depreciation.

Answer: Methods of providing or allocating depreciation are mentioned below:

  • Straight-line method
  • Written down method
  • Annuity method
  • Depreciation fund method
  • Insurance policy method
  • Revaluation method
  • Depletion method
  • Machine hour rate method

Also Read: What is Depreciation?

Question 2

On April 1st 2009, Atul glass limited purchased a machine for ₹. 90,000/- and spent ₹. 6,000/- on its carriage and ₹. 4,000/- on its erection. On the date on the purchase, it was estimated that the effective life of the machine will be 10 years and after 10 years, its scrap value will be ₹. 20,000/-.

Prepare Machine a/c and Depreciation a/c for 4 years after providing depreciation on Fixed Instalment Method. Accounts are closed on 31st March every year.

Solution:

As the rate of depreciation is not provided in the question, the amount of annual depreciation will be arrived as under:

Annual Depreciation = \(\frac{Cost\, of\, Asset – Scrap\, Value}{Estimated\, life\, of\, Asset}\)

= \(\frac{1,00,000\, -\, 20,000}{10\, years}\)

Rate of Depreciation = \(\frac{Amount\, of \, Depreciation}{Total\, Cost\, of\, Asset}\)

= \(\frac{8,000}{1,00,000}\, \times 100\, =\, 8\%\)

Dr. Machine a/c Cr.

Date Particulars Date Particulars
2009 2010
April 1 To Bank a/c 90,000 Mar 31 By Depreciation a/c

(8% on 1,00,000)

8,000
April 1 To Bank a/c (expenses) 6,000 Mar 31 By Balance c/d 92,000
April 1 To Bank a/c (expenses) 4,000
1,00,000 1,00,000
2010 2011
April 1 To Balance b/d 92,000 Mar 31 By Depreciation a/c

(8% on 1,00,000)

8,000
Mar 31 By Balance c/d 84,000
92,000 92,000
2011 2012
April 1 To Balance b/d 84,000 Mar 31 By Depreciation a/c

(8% on 1,00,000)

8,000
Mar 31 By Balance c/d 76,000
84,000 84,000
2012 2013
April 1 To Balance b/d 76,000 Mar 31 By Depreciation a/c

(8% on 1,00,000)

8,000
By Balance c/d 68,000
76,000 76,000
2013
April 1 To Balance b/d 68,000

Dr. Depreciation a/c Cr.

Date Particulars Date Particulars
2010 2010
Mar 31 To Machine a/c 8,000 Mar 31 By Statement of P & L 8,000
2011 2011
Mar 31 To Machine a/c 8,000 Mar 31 By Statement of P & L 8,000
2012 2012
Mar 31 To Machine a/c 8,000 Mar 31 By Statement of P & L 8,000
2013 2013
Mar 31 To Machine a/c 8,000 Mar 31 By Statement of P & L 8,000

Also Check: DK Goel Solution for Chapter 17 Provisions and Reserves

Question 3

On 1st April 2015, Radha Ltd. purchased machinery costing ₹ 5,00,000 plus IGST @ 12%. On July 1, 2018, the machinery was sold for ₹ 2,00,000 plus IGST @12%. Prepare machinery account calculating depreciation @10% pa.a on original cost method. Accounts are closed on 31st March each year.

Answer

Dr. Machinery Account Cr.
Date Particulars Amount ₹ Date  Particulars Amount
2015 2016
April 1 To Bank A/c 5,00,000 March 31

March 31

By Depreciation A/c

By Balance c/d

  50,000

4,50,000

5,00,000 5,00,000
2016 2017
April 1 To Balance b/d 4,50,000 March 31

March 31

By Depreciation A/c

By Balance c/d

  50,000

4,00,000

4,50,000 4,50,000
2017 2018
April 1 To Balance b/d 3,50,000 July 1 By Bank A/c

By Depreciation A/c

(for 3 months)

2,00,000

12,500

By Statement of profit and loss

(Balancing figure)

1,37,500
3,50,000 3,50,000

Note: (1) Entry for purchase of machinery

Machinery A/c* Dr. 5,00,000
Input IGST A/c Dr. 60,000
          To Bank A/c

(Machinery purchased and inter-state IGST paid @12%)

5,60,000

*Since machinery A/c is debited by ₹5,00,000, there will be no effect of IGST on machinery A/c. IGST paid (Input IGST) is not a cost machinery because IGST paid can be set off against IGST, CGST, and SGST collected. 

Note: (2) Extry for sale of machinery:

Bank A/c* Dr. 2,24,000
    To Machinery A/c 2,00,000
    To Output IGST A/c

(Machinery sold and inter-state IGST collected @12%)

24,000

*Since Machinery A/c is credited by ₹2,00,000 i.e excluding IGST, there will be no effect of Output IGST on Machinery A/c.

Question 4

A company whose accounting year is the calendar year purchased on 1st April 2008, machinery costing ₹30,000. It purchased further machinery on 1st October 2008, costing ₹20,000 and on 1st July 2009, costing ₹10,000.

On 1st January 2010, one-third of the machinery which was installed on 1st April 2008 became obsolete and was sold for ₹3,000.

Show how the machinery account appears in the books of the company, it is given that machinery was depreciated by fixed instalment at 10% p.a.

Answer

Answer

Dr. Machinery Account             Cr.
Date Particulars Amount ₹ Date  Particulars Amount
2008 2008
April 1 To Bank A/c (i) 30,000 Dec 31 By Depreciation A/c

(i)   2,250

(ii)     500 2,750
October 1 To Bank A/c (ii) 20,000 Dec 31 By Balance A/c

(i)   27,750

(ii)  19,500 47,250
50,000 50,000
2009 2009
Jan 1 To Balance b/d

(i)        27,750

(ii)       19,500

47,250 Dec 31 By Depreciation A/c

(i)      3,000

(ii)     2,000

(iii)        500 5,500
Jan 1 To Bank A/c (iii) 10,000 Dec 31 By Balance c/d

(i)       24,750

(ii)      17,500

(iii)       9,500 51,750
57,250 57,250
2010 2010
Jan 1 To Balance b/d

(i)       24,750

(ii)      17,500

(iii)       9,500

51,750 Jan 1

Jan 1

By Bank A/c

By statement Profit & Loss

3,000

5,250

Dec 31 By Depreciation A/c

(i)      2,000 (10%on ₹20,000)

(ii)     2,000

(iii)    1,000 5,000
Dec 31 By Balance c/d

(i)     14,500

(ii)    15,500

(iii)     1,000 38,500
51,750 51,750
2011

Jan 1

To Balance b/d 38,500

*Calendar year indicates that the accounts are closed on 31st December every year.

Note 1: Calculation of Loss on sale of one0third machinery:*Calendar year indicates that the accounts are closed on 31st December every year.

Balance of 1st machinery on 1st January  2010 = ₹ 24,750

Therefore, balance of one-third machinery on 1st January 2018 = ₹24,750 x 1/3 = 8,250

Less: Selling Price = 3,000

Loss = 8,250 – 3,000 = 5,250

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