STRAIGHT LINE METHOD

Problem.No.1 A machine was purchased for Rs.30,000 on 1.1.2006.this is expected to last for 5 years. Estimated
scrap at the end of five years is Rs.5, 000.Find out the rate of depreciation under straight line method.
Problem.No.2 Hasan purchased a machine on 1st Jan 2012 at rs.14,400.the scrap value after ten years, time is
expected to be rs.3,400.it depreciation is written off by equal installments every Dec.31,show the machinery A/c
for the first three years. Calculate the rate of depreciation.
Problem.No.3 Mr.shanmugavel purchased (second hand) a machine for Rs.8,000 on 1 st April 2010.He spent
Rs.3,500 on its installation. Depreciation is written off @ 10% p.a. On the original cost.on30th June 2013,the
machine was found to be unsuitable and sold for Rs.6,500.prepare the machine account from 2010 to 2013
assuming that the accounts are closed on 31 st Dec. every year.
Problem.No.4 On 1st Jan 2013, a machinery is bought for Rs.45,000.carriage and duty on it amounts to
Rs.15,000 and installation charges to Rs.10,000.it is expected that the machinery will have a working life of ten
years, at the end of which ,it may have a break up value of Rs.5,000.calculate the yearly charge of depreciation.
Also prepare the machinery account for the first three years. Accounts are closed on 31 st December every year.
Problem.No.5 A company whose accounting year is the calendar year purchased on 1 st April 1986 machinery
costing Rs.30,000. It purchased further machinery on 1 st October 1986 costing Rs.20,000 and on 1 st July 1987
costing Rs.10,000.On 1st Jan 1988 one-third of the machinery installed on 1 st April 1986 became obsolete and
was sold for Rs.3,000.Show how the machinery A/c would appear in the books of the company. Machinery is
depreciated at 10% p.a under fixed installment method.
DIMINISHING BALANCE METHOD/WRITTEN DOWN VALUE METHOD
Problem.No.6 A company acquired a machine on 1.1.88 at a cost of Rs 40000/- and spent Rs 1000/- on its
installation. The firm writes off depreciation at 10% on the diminishing balance. The books are closed on 31.12
each year. Show the machinery account for 3 years.
Problem.No.7 Machinery was purchased on 1-1-86 for Rs.40,000 .On 30 th June, another second hand machine
was purchased for Rs.15,000 and Rs.5,000 was spent for repairs. On 30 th June 1987 the second machine was sold
for Rs.15,000. Prepare machinery account after allowing depreciation of 10% p.a on the written down value.
Problem.No.8 A company purchased a second hand plant for Rs.30,000 and immediately spent Rs.5,000 on
repairs. The plant was put to use on January 2000.After using it for six years it was sold for Rs.15,000.You are
required to prepare the plant A/c for 6 years providing depreciation at 10% on diminishing balance method.
Accounts are closed on 31st December.
Problem.No.9 A Company whose accounting year is calendar year purchased on 1.4.98, machinery costing Rs.
30,000. It purchased further machinery on 1.10.98 costing Rs. 20,000 and on 1 st July 1999, costing Rs 20,000 and
1st July 1999, costing Rs 10,000. On 1 st January 2000, one third of the machinery, which was installed on 1st,
April 1998, became obsolete and sold for Rs, 3,000.
Show how the machinery account would appear in the books of the company, it being given that machinery was
depreciated by the written down value method at 10% p.a.
Problem.No.10 Machinery was purchased for Rs 60,000 on 1.1.90. On 1.1.91 another machine was purchased
for Rs.1, 20,000. On 1.7.92 one more plant was purchased for Rs.60, 000 (including the cost of installation of
Rs.3000) by disposing off the machinery which was purchased on 1.1.90 for Rs.21, 000. On 1.4.93, another
machinery was purchased for Rs.1,50,000 by disposing off the machinery, which was purchased on 1.1.91 for Rs.
1,05,000. Show the machinery Account up to 31.12.93 assuming that the rate of depreciation was 10% on
diminishing balance method.