Question

M/s Sam & Co. purchased Machinery on $1.10.2015$ for $Rs.1,00,000$ and paid for installation $Rs.20,000$
Depreciation under Straight Line Method $10$%.
Ascertain the Accumulated Depreciation balance as on $\mathrm{31.03.2018}$ ?

• A. $Rs.50,000$
• B. $Rs.40,000$
• C. $Rs.55,000$
• D. $Rs.30,000$

Answer 1

Answer: (D)

$Rs.30,000$

When the depreciation is charged by creating accumulated depreciation account, following journal entry is passed:

Depreciation A/c Dr.

To Accumulated Depreciation A/c

In the given situation, Machinery purchased on 1st Oct 2015 for Rs.100000 and installation paid Rs.20000. Depreciation is charged under straight line method @10%. Depreciation account will be debited every year by and credited to accumulated depreciation a/c .

For F.Y. 2015-16 for 6 months @10% on Rs.120000 : Rs.6000

For F.Y. 2016-17 @10% on Rs.120000: Rs. 12000

For F.Y. 2017-18 @10% on Rs.120000 Rs. 12000

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Total in accumulated depreciation a/c Rs.30000

Balance in accumulated depreciation account as on 31st March 2018 will be Rs.30000.