OMTEX – CLASSES (The Home Of Text)

OMTEX – CLASSES ACCOUNTS OMTEX – CLASSES

N A M E : M A R K S 2 4
R O L L N O : D A T E : - -
F.Y.B.Com DEPRECIATION
F.Y.B.Com
1. Lakxmi Bathi Palaji Enterprises have imported a machine on
1st July 2000 for Rs. 1, 60,000. They also paid customs duty
and freight Rs. 80,000 and incurred installation charges Rs.
60,000. Another indigenous machinery costing Rs. 1,000
was purchased on 1st January, 2001. On 1st July, 2002, 1/3rd of
the imported machinery was sold for Rs. 34,800/- having
become obsolete. Another machinery was purchased to
replace the same, for Rs. 50,000/-. Depreciation is to be
provided at @ 20% p.a. under WDV. Show the Machinery
Account for all the years.
2. Kumar enterprises Ltd. Co. purchased an imported
machinery costing Rs. 2, 00,000/- on 1st January 1997 with
expected life of 5 years. On 1st January, 1999, the company
revalued the machine at Rs. 2, 80,000 and revised its
expected life to be two more years. Prepare machinery
Account for the four years as per AS – 6 (revised).
OMTEX – CLASSES (The Home Of Text)
OMTEX – CLASSES ACCOUNTS OMTEX – CLASSES
N A M E : M A R K S 2 4
R O L L N O : D A T E : - -

1. On 1st January, 1998 Aamin Steel Co. Ltd. had bought some
items of machinery for Rs. 50,000. The machinery was
depreciated at 10% p.a. on reducing balance system. In the
beginning of the fourth year one machine which was
obsolete was disposed off for Rs. 4,000, its original cost
being Rs. 10,000/-. Prepare the machinery Account for 1998,
1999, 2000 & 2001.
2. Reliance India Co. maintains only one ledger account of all
machineries; it purchased the following machinery during
2000-2001 and 2001-2002.
Date of Purchase Amount
1 – 4 – 2000 80,000/-
1 – 7 – 2000 50,000/-
1 – 10 – 2000 80,000/-
1 – 4 – 2001 60,000/-
31 – 3 – 2002 1,00,000/-
A machine purchased on 1st April, 2000 was burnt on 1st
October 2000. The scrap value recovered was Rs. 8,000. A
machine purchased on 1st July 2000 was sold for Rs. 65,000 on 31st
March, 2002.
Depreciation is charged under the straight line method @
10% p.a.
You are required to prepare machinery account for 2 years
ended 31 – 3 – 2001 & 31 – 3 – 2002.
 OMTEX – CLASSES (The Home Of Text)
OMTEX – CLASSES ACCOUNTS OMTEX – CLASSES
N A M E : M A R K S 2 4
R O L L N O : D A T E : - -

1. What is depreciation? What are the different methods of

(6)
charging depreciation?
2. Differentiate between the Fixed Instalment Method and
(6)
the Reducing Balance Method of charging Depreciation.
3. On 1.1.97 Omtex (The Home Of Text) Co. acquired a machine
for Rs. 60,000. The estimated useful life of the machine was
estimated to be 5 years. On 1stJan 1999, the company revised
its expectation of the life of the asset which was expected to
continue for another 2 years.
Prepare machinery A/c for 4 years as per AS 6 (Revised).