Title TS-Grewal-Class11-CH11.pdf ✅

Q.1 Calculate the Amount of annual Depreciation and Rate of Depreciation under Straight Line Method (SLM) from the following: Purchased a second-hand machine for ₹ 96,000, spent ₹ 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value ₹ 72,000. The solution can be presented as follows Annual Depreciation = (Cost of Machine −Scrap Value of Machine) / Life in Years = (1,20,000 − 72,000) / 4 = 48000 / 4 = ₹ 12,000 Rate of Depreciation = (Amount of Depreciation / Cost of Machine) ×100 = (12,000/1,20,000) ×100 =10% Q.2 On 1st April, 2019, X Ltd. purchased a machine costing ₹ 4,00,000 and spent ₹ 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be ₹ 50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for the first three years. The books are closed on 31st March every year. The solution can be presented as follows
Working Note: Depreciation can be calculated as Depreciation = (4,00,000 + 50,000 – 50,000) / 10 = 4,00,000 / 10 = 40,000
Q.3 On 1st April, 2015, furniture costing ₹ 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for ₹ 5,000. Additions are made on 1st April 2016 and 1st October, 2018 to the value of ₹ 9,500 and ₹ 8,400 (Residual values ₹ 500 and ₹ 400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight-Line Method. The solution can be presented as follows
Working Notes: We know that Annual Depreciation = (Cost of Asset −Scrap Value of Asset) / Life in Years Now for Furniture 1 Annual Depreciation = (55000 – 5000) / 10 = 50000 / 10 = 5000 Furniture 2 Annual Depreciation = (9500 – 500) / 10 = 9000 / 10 = 900 Furniture 3 Annual Depreciation = (8400 – 400) / 10 = 8000 / 10 = 800 As furniture was purchased 6 months into the accounting hence depreciation for 6 months will be half therefore it will be 400.