Question

Question 2.
On 1st April, 2015, 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 t he first three years. The books are closed on 31st March every year.

Answer 1

Explanation:

Purchased a second-hand machine for ₹ 96,000, spent ... On 1st April, 2015, X Ltd. purchased a machine costing ₹ 4 ... is 10 years, after which its residual value will be ₹ 50,000 only.

Answer 2

Answer:

Explanation:

Calculation of depreciation

Depreciation p.a = 4,00,000 + 50000 - 50000(scrap value) / 10

= 40000

                                        Machinery Account                                                          

To Bank  A/c       400000        By Depreciation           40000

To Bank a/c            50000        By Balance c/d         410000

                                                                                                                               

                             450000                                            450000                          

To Balance b/d      410000          By Depreciation      40000

                                                      By Balance c/d      370000

                                                                                                                                 

                              410000                                          410000                            

To Balance b/d      370000        By Depreciation      40000

                                                    By Balance c/d       330000

                                                                                                                                   

                               370000                                         370000