Illustration 3
On April, 1, 2008 Prakash & Sons bought furniture costing ` 60,000. On July, 1, 2010. Furniture was sold for ` 30,000
Prepare Furniture Account assuming depreciation was charged @ 10% per annum on March 31 each year.
On the basis of information given in Illustration 3, prepare Funiture Account assuming depreciation was charged @ 15% per annum on reducing installment method.
There is another treatment for charging Depreciation. In this treatment, Provision for Depreciation Account is opened and depreciation charged in this account instead of Asset Account. Following Journal entries are passed at the end of each accounting period.
In this treatment the balance of Asset Account remains same throughout its useful life. Provision for Depreciation is show liabilities side of Balance Sheet.
Illustration 5
Krishna lifestyle limited purchased a machine for ` 1,25,000 including installation cost on January 1, 2008. On October 1, 2010, machine was sold for ` 50,000.
Depreciation was provided @ 20% p.a. on Fixed Installment method and accounts are closed on December 31 each year.
Show the Machinery Account and Provision for Depreciation Account for the year 2008 to 2010.Solution :
CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari )
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