Depreciation Examples

1. An asset is purchased for Rs.60000. Depreciation is to be provided annually according to the

straight line method. The useful life of the assest is 10 years and the residual value is
Rs.7000. Find out the amount of depreciation and prepare Asset A/c for the first threee
years. Accounts are closed on December 31 each year.
2. Mr.Mahesh Kumar purchased a machine on January 1,2011 for Rs.18800. The scrap value in
8 years time is expected to be Rs.3200. If depreciation is charged by equal installments
every year on December 31, then show the Machinery A/c for the first four years and also
calculate the rate of depreciation.
3. A new machine was purchased for Rs.120000 on January 1, 2015 and paid installation
charges amounting to Rs.4000. It started working from April 1, 2015 continuously and
regularly. You are required to show the Machinery A/c and Depreciation A/c for the first
three years, fro the year ending December 31 each year, if the rate of depreciation is 10%
p.a. on straight line method.
4. On January 1, 2010, Mr. G.K. Sen purchased a plant for Rs.80000 and soent Rs.4000 on
installation. It is expected that its useful life would be 9 years and salvage value would be
Rs.2100. Depreciation is ti be provided on the basis of fixed installment method. Show Plant
A/c and Depreciation A/c for the first three years at the end of each accounting period i.e.
on December 31.
5. On January 1, 2013 Star Traders purchased a machine costing Rs. 8200 and paid carriege and
installation charges amounting to Rs. 3000. It has been decided to depreciate it at 15% P.A.
on diminishing balance method. Show Machinery A/c for the first three years (Annual
Accounts closes on December 31st every year)
6. On January 1, 2012, an old Machinery was purchased at Rs. 36,000 and spent further
expenditures, Rs. 8000 for its repairs and Rs. 2,800 for installation.
Assuming the annual depreciation to be 10%, show the machinery A/c for the first four years
(i) stright line method and (ii) reducing instalment method. Accounting years closes on
December 31st every year.
7. On January 1, 2010, the Machinery A/c of K.P. Traders show a balance of Rs. 207,000. On
May 1, 2010, a new machinery was purchased for Rs. 18,000 and it started functioning from
July 1, 2010. On September 1, 2010, an old machinery was sold for Rs. 16,200 which was
installed on July 1, 2008 at a cost of Rs.22,400.
Deprecaiton is charged at 15% P.A on reducing instalment method. Show Machinery A/c for
the year ending December 31, 2010.
8. On January 1, 2013, a Machinery was purchased by X for Rs. 50,000. On July 1, 2014,
additions were made to the extent of Rs. 10,000. On April 1, 2015, further additions were
made to the extent of Rs. 6, 4000.
On June 1, 2016 Machinery whose original value was Rs. 8,000 on January 1, 2013 was sold
for Rs. 6,000. Depreciation is charged at 10% onb original cost. Show the Machinery Account
for the year 2013 to 2016 in the books of X.X closes his book on December31.
9. A firm purchases a lease for 5 years fr Rs. 40,000. It decides to write off depreciation on the
Annuity Method charging the rate of interest at 5% per annum. The annuity table shows that
annual amount necessary to write off Re. 1 for 5years at 5% is 0.230975.
10. On 1st April, 2001, a firm purchased a three year lease of premises for Rs. 10,000 and it was
decided to depreciate the lease by annuity method calculating interest at 5% per annum.
Show the lease hold property account for 3 years. The annuity tale shows that annual
amount to write off Re.1 for 3 years at 5% is 0.367208.