Nirmal Limited manufacturing concern whose books are closed on 31st March, purchased Machinery for Rs. 2,00,000 on 1 st April, 2010. Additional Machinery was acquired for Rs. 1,00,000 on 30th September, 2010 and for Rs. 50,000 on 1 st April, 2011. Machinery which was purchased for Rs. 1,00,000 on 30th September, 2010 was sold for Rs. 80,000 on 31st March, 2013. Its required to give Machinery Account for the years ended 31st March, 2011, 31st March, 2012, 31st March, 2013 taking into account depreciation at 10% p.a. on written down value method. ?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Nirmal Limited manufacturing concern whose books are closed on 31st March, purchased Machinery for Rs. 2,00,000 on 1 st April, 2010. Additional Machinery was acquired for Rs. 1,00,000 on 30th September, 2010 and for Rs. 50,000 on 1 st April, 2011. Machinery which was purchased for Rs. 1,00,000 on 30th September, 2010 was sold for Rs. 80,000 on 31st March, 2013.
Its required to give Machinery Account for the years ended 31st March, 2011, 31st March, 2012, 31st March, 2013 taking into account
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