Depreciation & Amortization
Question.1
The following balances appear in the books of Dheeraj Enterprises:
Rs.
Machinery account as on 01.04.2021 12,00,000
Provision for depreciation account as on 01.04.2021 4,65,000
On 1st October, 2021 the Machinery which was purchased on 1st April, 2018 for Rs. 2,00,000 was sold for Rs.
1,10,000 and on the same date another Machinery was purchased for Rs. 4,80,000. The firm has been charging
depreciation at 10% p.a. on written down value of the Machinery every year. Prepare the Machinery account,
Provision for Depreciation account and Machinery disposal account for the year ending 31st March, 2022.
June 2023 (10 Marks) Standard Time : 18 Min. Actual Time : ________
Question.2
A purchased a machinery for Rs. 1,30,000 on 1st April, 2019 and paid Rs. 20,000 for freight & installation
charges. On 1st October, 2021 another machine was purchased for 50,000 and sold old machinery for Rs.
1,00,000. The machine purchased on 1st October, 2021 was installed on 1st January, 2022.
Under existing practice, the company is charging depreciation @ 20% p.a. on the original cost. However, from
1st April, 2021 it decided to adopt WDV method and charge depreciation @15% p.a. You are required to
prepare Machinery Account from 1st April, 2019 to 31st March, 2022.
Nov. 2022 (4 Marks) Standard Time : 7 Min. Actual Time : ________
Question.3
"The cost of Property, Plant and Equipment comprises of any cost directly attributable to bring the asset to the
location and condition necessary for it to be capable of operating in a manner intended by the enterprise".
Give any five examples of such 'directly attributable costs'.
Nov. 2022 (5 Marks) Standard Time : 9 Min. Actual Time : ________
Question.4
The Machinery Account of a Factory showed a balance of Rs. 95 Lakhs on 1st April,2020. The Books of
Accounts Depreciation is written off of the Factory are closed on 31st March every year and @ 10% per
annum under the Diminishing Balance Method. On 1st September,2020 a new machine was acquired at a cost
of Rs. 14 Lakhs and Rs. 44,600 was incurred on the same day as installation charges for erecting the machine.
On 1st September,2020 a machine which had cost Rs. 21,87,000 on 1st April,2018 was sold for Rs. 3,75,000.
Another machine which had cost Rs. 21,85,000 on 1st April,2019 was scrapped on 1st September,2020 and it
realized nothing.
Prepare Machinery Account for the year ended 31st March,2021. Allow the same rate of depreciation as in the
past and calculate depreciation to the nearest multiple of a rupee. Also show all the necessary working notes.
June 2022 (10 Marks) Standard Time : 18 Min. Actual Time : ________
1
Question.5
From the following transactions of a concern, prepare the Machinery Account for the year ending 31 st
December, 2022:
01.01.21 Purchased a second – hand Machinery for Rs. 2,00,000
01.01.21 Spent Rs. 50,000 on repairs for making it serviceable
30.06.21 Purchased additional new Machinery for Rs. 3,50,000
30.06.21 Installation charges of new Machine Rs. 15,000
01.04.22 Repairs and maintenance of Machinery Rs. 30,000
30.06.22 Sold second hand Machinery purchased on 01.01.21 for Rs. 1,55,000
31.12.22 Depreciate the Machinery at 10% per annum by WDV method
Dec. 2023 (5 Marks) Standard Time : 9 Min. Actual Time : ________
Question. 6
Discuss the factors taken into consideration for calculation of depreciation.
Nov. 2020 (5 Marks) Standard Time : 9 Min. Actual Time : ________
Question. 7
On 1st January, 2019 Kohinoor Transport Company purchased a Bus for Rs. 8,00,000. On 1 st July, 2020 this
bus was damaged due to fire and was completely destroyed and Rs. 6,00,000 were received by a cheque from
the Insurance Company in full settlement on 1st October, 2020. On 1st July, 2020 another Bus was purchased
by the company for Rs. 10,00,000.
The Company charges Depreciation @ 20% per annum under the WDV Method. Calculate the amount of
depreciation for the year ended 31st March, 2021 and gain or loss on the destroyed Bus.
Dec. 2021 (5 Marks) Standard Time : 9 Min. Actual Time : ________
Question. 8
X purchased a machinery on 1st January 2017 for Rs. 4,80,000 and spent Rs. 20,000 on its installation. On July
1, 2017 another machinery costing Rs. 2,00,000 was purchased. On 1st July, 2018 the machinery purchased on
1st January, 2017 having become scrapped and was sold for Rs. 2,90,000 and on the same date fresh
machinery was purchased for Rs. 5,00,000. Depreciation is provided annually on 31st December at the rate of
10% p .a. on written down value. Prepare Machinery account for the years 2017 and 2018.
Nov. 2019 (4 Marks) Standard Time : 7 Min. Actual Time : ________
Question. 9
A Firm purchased an old Machinery for Rs. 37,000 on 1st January, 2015 and spent Rs. 3,000 on its
overhauling. On 1st July 2016, another machine was purchased for Rs. 10,000. On 1st July 2017, the
machinery which was purchased on 1st January 2015, was sold for Rs. 28,000 and the same day a
new machinery costing Rs. 25,000 was purchased. On 1st July, 2018, the machine which was
purchased on 1st July, 2016 was sold for Rs. 2,000.
Depreciation is charged @ 10% per annum on straight line method. The firm changed the method
and adopted diminishing balance method with effect from 1st January, 2016 and the rate was
increased to 15% per annum. The books are closed on 31st December every year.
Prepare Machinery account for four years from 1st January, 2015.
May 2019 (10 Marks) Standard Time : 18 Min. Actual Time : ________
2
Question. 10
A Plant & Machinery costing Rs. 10,00,000 is depreciated on straight line assuming 10 year working life and
zero residual value, for four years. At the end of the fourth year, the machinery was revalued upwards by Rs.
40,000. The remaining useful life was reassessed at 8 year. Calculate Depreciation for the fifth year.
Nov. 2018 (4 Marks) Standard Time : 7 Min. Actual Time : ________
