DEPRECIATION QUESTION WITH ANSWER QUESTION NO. 38

OMTEX CLASSES

38.  On 1^st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On 1^st October, 2004 they purchased one more computer for Rs. 40,000. On 1^st October, 2006 they sold one computer, which was purchased on 1^st April, 2004 for Rs. 18,780. Depreciation on computers was provided @ 10% p.a. on diminishing balance method and the financial year closes on 31^st March every year. Prepare computer A/c depreciation A/c for years 2004 – 05, 2005 – 06 and 2006 – 07. (September. 2008) [W.D.V.]

WORKING NOTE : CALCULATION OF DEPRECIATION

Date	Machinery	Machinery 2	Machinery 3	Total depreciation
1.4.04	40000	40000
1.10.04			40000
Depreciation @10%	4000	4000	2000	10000
1.4.05	36000	36000	38000
Depreciation @10%	3600	3600	3800	11000
1.4.06	32400	32400	34200
Depreciation @10%	1620			1620
30.9.06/1.10.06	30780
SOLD	18780
	12000 Loss
Depreciation @10%		3240	3420	6660
1.4.07		9160	30780

DATE	PARTICULARS	AMOUNT	DATE	PARTICULARS	AMOUNT
1.4.04	To cash / bank account	40000	31.3.05	By depreciation account	10000
1.4.04	To cash / bank account	40000
1.10.04	To cash / bank account	40000	31.3.05	By balance c/d	110000
		120000			120000
1.4.05	To balance b/d	110000	31.3.06	By depreciation account	11000
			31.3.06	By balance c/d	99000
		110000			110000
1.4.06	To balance b/d	99000	1.10.06	By depreciation account	1620
			1.10.06	By cash/bank account	18780
			1.10.06	By profit / loss account	12000
			31.3.07	By depreciation account	6660
			31.3.07	By balance c/d	59940
		99000			99000
1.4.07	To balance b/d	59940