Question

M/s sam Co. purchased Machinery on 1st oct 2015 for Rs. 100000 and paid for installation Rs. 20000
Depreciation under written down value Method 10%
Ascertain the Accumulated Depreciation balance as on 31st mar 2018 ______.

• A. $27,660$
• B. $27,600$
• C. $27,750$
• D. $27,000$

Answer 1

The correct option is A $27,660$

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 written down value method @10%. Depreciation account will be debited every year by and credited to accumulated depreciation a/c .

Depreciation will be calculated as:

Cost of the machinery including installation; Rs.120000

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

W.D.V. as on 1st April 2016 Rs.114000

Less: Depreciation for F.Y. 2016-17 @10% on Rs.114000: Rs. 11400

------------------

W.D.V. as on 1st April 2017 Rs.102600

Less; Depreciation F.Y. 2017-18 @10% on Rs.102600 Rs. 10260

----------------

Total in accumulated depreciation a/c will be as follows:

For F.Y. 2015-16 Rs.6000

For F.Y. 2016-17 Rs.11400

For F.Y. 2017-18 Rs.10260

----------------

Total Rs.27660

Balance in accumulated depreciation account as on 31st March 2018 will be Rs.27660 under written down value method.