Question

Sunny ltd purchased a vehicle for rs 400000. After 4 years its Salvage valve is estimated at rs 40000. Find out the amount of depreciation to be charged every year on straight line basis and show how the vehicle account would appear for 4 years assuming, it is sold for rs 50000 at the end, when provision for depreciation account is maintained

Answer 1

Answer:

hope this helps you.

Explanation:

these are the two steps

Answer 2

vehilcal account

to bank a/c.      400000.   by dep a/c.  90000

                                           by bal C/d.310000

                         400000.                     400000

to bal b/d.        310000.      by dep a/c. 90000

                                            by bal c/d.210000

                        310000.                        310000

to bal b/d.        210000.    by dep a/c 90000

                                           by bal c/d. 130000

                        210000.                        210000

to bal b/d.       130000.    by dep a/c. 90000

to profit.           10000      by bank(sale)50000

                                         

                       140000.                       140000

working note 1: depreciation  

400000-40000/4 = 360000/4= 90000

working note 2 : cost of vehicle is 400000

   less:   depreciation for 4 years

             90000×4 =                         360000

                                                         ________

                            remaining value.   40000

                 sale  value.                     50000

                  profit=10000