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11th Accountancy - Depreciation Accounting Book Back Questions

Published on: 06/09/2019

Depreciation Accounting

Download Tamil Nadu 11th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.

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Questions:

Multiple Choice Question

5 x 1 = 5

Depreciation is to be calculated from the date when _______.

(a)

Asset is put to use

(b)

Purchase order is made

(c)

Asset is received at business premises

(d)

Invoice of assets is received

Which method shall be efficient, if repairs and maintenance cost of an asset increases as it grows older.

(a)

Straight line method

(b)

Reducing balance method

(c)

Sinking fund method

(d)

Annuity method

For which of the following assets, the depletion method is adopted for writing off cost of the asset?

(a)

Plant and machinery

(b)

Mines and quarries

(c)

Buildings

(d)

Trademark

Under the written down value method of depreciation, the amount of depreciation is ____.

(a)

Uniform in all the years

(b)

Decreasing every year

(c)

Increasing every year

(d)

None of the above

Under straight line method, the amount of depreciation is ____.

(a)

Increasing every year

(b)

Decreasing every year

(c)

Constant for all the years

(d)

Fluctuating every year

Generic 2

3 x 2 = 6

Find out the rate of depreciation under straight line method from the following details:
Original cost of the asset = Rs.10,000
Estimated life of the asset = 10 years
Estimated scrap value at the end = Rs.2,000

A firm acquired a machine on 1st April 2015 at a cost of Rs. 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.

A company purchased a building for Rs. 50,000. The useful life of the building is 10 years and the residual value is Rs. 2,000. Find out the amount and rate of depreciation under straight line method.

Generic 3

3 x 3 = 9

On 1st April 2015, Kumar purchased a machine for Rs.80,000 and spent Rs.20,000 on its installation. The residual value at the end of its expected useful life of 8 years is estimated at Rs.4,000. On 30th September 2017, the machine is sold for Rs.50,000. Depreciation is to be provided according to straight line method. Prepare Machinery Account. Accounts are closed on 31st December every year.

10.

A firm purchased a plant on 1.1.2018 for Rs.9,000 and spent Rs.1,000 as erection charges. Calculate the amount of depreciation for the year 2018 @ 15% per annum under the written down value method. Accounts are closed on 31st March every year.

11.

Calculate the rate of depreciation under straight line method.
Purchase price of a machine Rs. 80,000
Expenses to be capitalised Rs. 20,000
Estimated residual value Rs. 4,000
Expected useful life 4 years

Generic 5

2 x 5 = 10

12.

Anand bought a machinery for Rs.1,00,000 on 1-1-2015. On 1-6-2016, he bought another machine for Rs.50,000. On 1-10-2017, he purchased another machine for Rs.20,000. Provide depreciation at 10% p.a. on straight line method. Prepare machinery account for the years 2015 to 2017 by using accounts by assuming accounts are closed on 31^st December every year.

13.

On 1st April 2008, Sudha and Company purchased machinery for Rs. 64,000. To instal the machinery expenses incurred was Rs. 28,000. Depreciate machinery 10% p.a. under straight line method. On 30^th June, 2010 the worn out machinery was sold for Rs. 52,000. The books are closed on 31^st December every year. Show machinery account.

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Answers Key:

Multiple Choice Question

5 x 1 = 5

(a)
Asset is put to use

(b)
Reducing balance method

(b)
Mines and quarries

(b)
Decreasing every year

Generic 2

3 x 2 = 6

\( \text { Amount of depreciation per year } =\frac{\text { Original cost of the asset }-\text { Estimated scrap value }}{\text { Estimated useful life of the asset in years }} \)
\(={10,000-2,000\over 10}={8,000\over 10}\) = Rs.800 per year
Rate of depreciation = \({Amount\ of\ depreciation\ per\ year\over Original\ cost}\times100\)
\(={800\over 10,000}\times100=8\%\)

**Ledger Account**
**Dr. Machinery Account Cr.**
Date	Particulars	Amount Rs.	Date	Particulars	Amount Rs.
1.4.2015	To Bank A/c	50,000	31.12.2015	By Depreciation Alc	11,250
				(50,000 x \(\frac {30}{100} \times \frac {9}{12}\))
			31.12.2015	By Balance c/d	38,750
		50,000			50,000
1.1.2016	To Balance b/d	38,750	31.12.2016	By Depreciation A/c	11,625
				(38,750 \(\times\) \(\frac {30}{100}\))
			31.12.2016	By Balance c/d	27,125
		38,750			38,750
1.1.2017	To Balance b/d	27,125	31.12.2017	By Depreciation A/c	8,138
			31.12.2017	By Balance c/d.	18,987
		27,125			27,125
1.1.2018	To Balance b/d	18,987

Dr. Depreciation Account Cr.
Date	Particulars	Amount Rs.	Date	Particulars	Amount Rs.
31.12.2015	To Machinery A/c	11,250	31.12.2015	By Profit and loss A/c	11,250
		11,250			11,250
31.12.2016	To Machinery A/c	11,625	31.12.2016	By Profit and loss A/c	11,625
		11,625			11,625
31.12.2017	To Machinery A/c	8,138	31.12.2017	By Profit and loss A/c	8,138
		8,138			8,138

Amount of Depreciation = \({Total\ cost - scrap\ value\over Estimated\ life}\)
\(={50,000-2,000\over 10}={48,000\over10}\)
= Rs.4,800
Rate of Depreciation = \({Amount\ of\ Depreciation\over Original\ Cost}\times100\)
\(={4,800\over 50,000}\times100=9.6\%\)
Amount of depreciation: Rs. 4,500; Rate of depreciation 9%)

Generic 3

3 x 3 = 9

\( \text { Amount of depreciation per year } =\frac{\text { Original cost of the asset }-\text { Estimated scrap value }}{\text { Estimated useful life of the asset in years }} \)
= \(\frac{1,00,000-4,000}{8}\)
= 12,000 per year
\( \text { Rate of depreciation per year } =\frac{\text { Amount of depreciation per year }}{\text { Original cost }} \times 100\)
= \(\frac{12,000}{1,00,000}\times100\) = 12%

Note:
Cost of the asset = Purchase price + Installation cost
= 80,000 + 20,000 = Rs. 1,00,000
Ledger accounts

Dr. Machinery Account Cr.
Date	Particulars		Date	Particulars
2015 April 1	To Bank A/c	80,000	2015 Dec 31	By Depreciation A/c	9,000
April 1	To Bank A/c	20,000		(1,00,000 ×12/100 × 9/12)
			Dec 31	By Balance c/d	91,000
		1,00,000			1,00,000
2016 Jan 1	To Balance b/d	91,000	2016 Dec 31	By Depreciation A/c	12,000
				(1,00,000 ×12/100)
			Dec 31	By Balance c/d	79,000
		91,000			91,000
2017 Jan 1	To Balance b/d	79,000	2017 Sep 30	By Depreciation A/c	9,000
				(1,00,000 ×12/100 × 9/12)
			Sep 30	By Bank A/c	50,000
			Sep 30	By Profit and Loss A/c	20,000
				(Loss on sale)
		79,000			79,000

10.

Original cost = 9,000 + 1,000 = 10,000
Rate of depreciation = 15%
Date of purchase = 1.1.2018
Number of months used = 1.1.2018 to 31.03.2018 = 3 months
Amount of depreciation = 15% on 10,000 for 3 months
= 10,000 ×15% × 3/12 = Rs.375

11.

Amount of Depreciation = \({(Price\ of\ the\ Asset + Installation\ charges) - Scrap value\over Estimated\ life\ of\ the\ Asset}\)
\(={(80,000 +20,000) - 4, 000\over \ years}\)
\(={96,000\over 4}=Rs.24,000\)
Rate of Depreciation = \({Amount\ of\ depreciation\over Original\ Cost}\times100\)
\({24,000\over 1,00,000}\times10=24\%\)

Generic 5

2 x 5 = 10

12.

Dr. Machinery Account Cr
Date	Particulars	Rs	Date	Particulars	Rs
2015			2015
Jan 1	To Bank A/c	1,00,000	Dec 31	By Depreciation A/c	10,000
			Dec 31	By Balance c/d	90,000
		1,00,000			1,00,000
2016			2016
Jan 1	To Balance b/d	90,000	Dec 31	By Depreciation A/c	12,500
June 1	To Bank A/c	50,000	Dec 31	By Balance c/d	1,27,500
		1,40,000			1,40,000
2017			2017
Jan 1	To Balance b/d	1,27,500	Dec 31	By Depreciation A/c	15,500
Oct 1	To Bank A/c	20,000	Dec 31	By Balance c/d	1,32,000
		1,47,500			1,47,500
2018 Jan1	To Balance b/d	1,32,000

13.

Calculation of profit or loss on sale of machinery Particulars Amount Rs. Cost of machinery 64,000 Add: Installation charges 28,000 92,000 Less: 1^st year depreciation 31.12.2008 6,900 \(\left(92,000\times{10\over 100}\times{9\over 12}\right)\) 85,100 Less: II^nd year depreciation 31.12.2009 9,200 \(\left(92,000\times{10\over 100}\right)\) 75,900 Less: ^IIIrd year depreciation 30.6.2010 4,600 \(\left(92,000\times{10\over 100}\times{6\over 12}\right)\) Book value on the date of sale 71,300 Sales value 52,000 Loss on sale of machinery 19,300 Dr In the books of Sudha and company Machinery Account Cr Date Particulars Amount Rs. Date Particulars Amount Rs. 2008 April 1 To Bank A/c 64,000 2008 Dec 31 By Depreciation A/c 6,900 2008 April 1 To Bank A/c 28,000 Dec 31 By Balance c/d 85,100 92,000 92,000 2009 Jan 1 To Balance b/d 85,100 2009 Dec 31 By Depreciation A/c 9,200 Dec 31 By Balance c/d 75,900 85,100 85,100 2010 Jan 1 To Balance b/d 75,900 2010 June 30 By Depreciation A/c 4,600 June 30 By Bank A/c 5,2,000 June 30 By Profit and loss A/c 19,300 75,900 75,900