Question 3.
On 1st April, 2014, 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 2015 and 1st October, 2017 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.
Answers
The furniture account is shown below:
Explanation:
The furniture account is as follows:
Depreciation is the term of accounting, which is defined as the method of allocating the cost of the physical or the tangible asset over the life expectancy or the useful life of the asset. It represent how much of the asset value has been used.
Computation of depreciation as:
Depreciation on Furniture 1 = Cost of asset - Scrap value / Number of useful life
= Rs 55,000 - Rs 5,000 / 10
= Rs 50,000 / 10
= Rs 5,000
Depreciation on Furniture 2 = Cost of asset - Scrap value / Number of useful life
= Rs 9,500 - Rs 500 / 10
= Rs 9,000 / 10
= Rs 900
Depreciation on Furniture 3 = Cost of asset - Scrap value / Number of useful life
= Rs 8,400 - Rs 400 / 10
= Rs 8,000 / 10
= Rs 800
Depreciation on Furniture 3 for six months = Rs 800 × 6/ 12
= Rs 400
You can learn more from here about depreciation:
brainly.in/question/2197804
You can learn more from here about depreciation:
brainly.in/question/12495557
