Question

A boiler was purchased from abroad for ₹ 10,000; shipping and forwarding charges ₹ 2,000, Import duty ₹ 7,000 and expenses of installation amounted to ₹ 1,000.
Calculate the depreciation for the first three years (separately for each year) @ 10% on Diminishing Balance Method.

Answer 1

Boiler Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
I year					I year
Jan.01		Bank (10,000 + 2,000 + 7,000 + 1,000)		20,000	Dec.31	Depreciation		2,000
						Balance c/d		18,000
				20,000				20,000
II year					II year
Jan.01		Balance b/d		18,000	Dec.31	Depreciation		1,800
					Dec.31	Balance c/d		16,200
				18,000				18,000
III year					III year
Jan.01		Balance b/d		16,200	Dec.31	Depreciation		1,620
					Dec.31	Balance c/d		14,580
				16,200				16,200