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NCERT · Class 11 · Accountancy

Chapter 7: Depreciation, Provisions and Reserves

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Numerical Answers for NCERT Accountancy Solutions Class 11 Chapter 7

22 questions
Q11Written answer

Saraswati Ltd. purchased a machinery costing ₹ 10, 00,000 on January 01, 2011. A new machinery was purchased on 01 May, 2012 for ₹ 15, 00,000 and another on July 01, 2014 for ₹ 12, 00,000. A part of the machinery which originally cost ₹ 2, 00,000 in 2011 was sold for ₹ 75,000 on October 31, 2014. Show the machinery account, provision for depreciation account and machinery disposal account from 2011 to 2015 if depreciation is provided at 10% p.a. on original cost and account are closed on December 31, every year.

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Machinery account, provision for depreciation account and machinery disposal account is displayed below:

Books of Saraswati Ltd.

Machinery Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2011 2011
Jan.01 Bank (i) 10,00,000
(8,00,000 + 2,00,000) Dec.31 Balance c/d 10,00,000
10,00,000 10,00,000
2012 2012
Jan.01 Balance b/d 10,00,000 Dec.31 Balance c/d 25,00,000
May.01 Bank (ii) 15,00,000
25,00,000 25,00,000
2013 2013
Jan.01 Balance b/d 25,00,000 Dec.31 Balance c/d 25,00,000
25,00,000 25,00,000
2014 2014
Jan.01 Balance b/d 25,00,000 Oct.31 Machinery Disposal 2,00,000
Jul.01 Bank (ii) 12,00,000 Dec.31 Balance c/d
(i) 8,00,000 (ii) 15,00,000
(iii) 12,00,000 35,00,000
37,00,000 37,00,000
2015 2015
Jan.01 Balance c/d 35,00,000 Dec.31 Balance c/d 35,00,000
35,00,000 35,00,000
Provision for Depreciation Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount 

₹
2011 2011
Dec.31 Balance c/d 1,00,000
Dec.31 Depreciation (i) 1,00,000
1,00,000 1,00,000
2012 2012
Dec.31 Balance c/d 3,00,000 Jan.01 Balance c/d 1,00,000
Dec.31 Depreciation
(i) 1,00,000 (ii) 1,00,000 2,00,000
(8 months)
3,00,000 3,00,000
2013 2013
Dec.31 Balance b/d 5,50,000 Jan.01 Balance c/d 3,00,000
Dec.31 Depreciation 2,50,000
5,50,000 (i) 1,00,000 (ii) 1,50,000, 5,50,000
2014 2014
Oct.31 Machinery Disposal 76,667 Jan.01 Balance b/d 5,50,000
Dec.31 Balance c/d 7,80,000 Oct.31 Depreciation 16,667
Dec.31 Depreciation
(i) 80,000, (ii) 1,50,000,
(iii) 60,000 2,90,000
8,56,667 8,56,667
2015 2015
Dec.31 Balance c/d 11,30,000 Jan.01 Balance c/d 7,80,000
Dec.31 Depreciation
(i) 80,000, (ii) 1,50,000,
(iii) 1,20,000 3,50,000
11,30,000 11,30,000
Machinery Disposal Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2014 2014
Oct.31 Machinery 2,00,000 Oct.31 Depreciation 76,667
Oct.31 Bank 75,000
Oct.31 Profit and Loss (Loss) 48,333
2,00,000 2,00,000

Working Note for solution:

Opening Balance Depreciation Closing Balance
2011 2,00,000 – 20,000 = 1,80,000
2012 1,80,000 – 20,000 = 1,60,000
2013 1,60,000 – 20,000 = 1,40,000
2014 1,40,000 – 16,667 = 1,23,333
Accumulated Depreciation 76,667
Value on Oct. 01, 2014 1,23,333
Sale on Oct. 01, 2014 – 75,000
Loss on sale ₹ 48,333

Hence, we see that a loss of ₹. 48,333 is observed in sale of machine.

Q12Written answer

On July 01, 2011 Ashwani purchased a machine for ₹ 2, 00,000 on credit. Installation expenses ₹ 25,000 are paid by cheque. The estimated life is 5 years and its scrap value after 5 years will be ₹ 20,000. Depreciation is to be charged on straight line basis. Show the journal entry for the year 2011 and prepare necessary ledger accounts for first three years. 

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The journal entry is prepared as follows:

Books of Ashwani

Journal
Date Particulars L.F. Debit Amount ₹ Credit Amount ₹
2011
Jul.01 Machinery A/c Dr. 2,25,000
To Creditors for Machinery A/c 2,00,000
To Bank A/c 25,000
(Machinery bought on credit and ₹ 25,000 paid

for installation through cheque)
2011
Dec.31 Depreciation A/c Dr. 20,500
To Machinery A/c 20,500
(Depreciation charged on Machinery)
2011
Dec.31 Profit and Loss A/c Dr. 20,500
To Depreciation A/c 20,500
(Depreciation transferred to Profit and Loss Account)
2012
Dec.31 Depreciation A/c Dr. 41,000
To Machinery A/c 41,000
(Depreciation charged on Machinery)
2012
Dec.31 Profit and Loss A/c Dr. 41,000
To Depreciation A/c 41,000
(Depreciation transferred to Profit and Loss Account)
2013
Dec.31 Depreciation A/c Dr. 41,000
To Machinery A/c 41,000
(Depreciation charged on Machinery)
2013
Dec.31 Profit and Loss A/c Dr. 41,000
To Depreciation A/c 41,000
(Depreciation transferred to Profit and Loss Account)
Ledger

Machinery Account
Dr. Cr.
Date Particulars J.F. Amount 

₹

 Date Particulars J.F. Amount 

₹
2011 2011
Jul.01 Creditors for Machinery 2,00,000 Dec.31 Depreciation 20,500
Jul.01 Bank 25,000 Dec.31 Balance c/d 2,04,500
2,25,000 2,25,000
2012 2012
Jan.01 Balance b/d 2,04,500 Dec.31 Depreciation 41,000
Dec.31 Balance c/d 1,63,500
2,04,500 2,04,500
2013 2013
Jan.01 Balance c/d 1,63,500 Dec.31 Depreciation 41,000
Dec.31 Balance c/d 1,22,500
1,63,500 1,63,500

Hence, balance of machine account is ₹. 1, 22,500.

Working Note for solution:

Calculation of annual depreciation is done below

Depreciation (p.a.) = (2,00,000 + 25,000 – 20,000)
5
= ₹ 41,000/annum
Q13Written answer

On October 01, 2010, a Truck was purchased for ₹ 8, 00,000 by Laxmi Transport Ltd. Depreciation was provided at 15% p.a. on the diminishing balance basis on this truck. On December 31, 2013 this Truck was sold for ₹ 5, 00,000. Accounts are closed on 31st March every year. Prepare a Truck Account for the four years.

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The truck account is prepared below:

Books of Laxmi Transport Ltd.

Truck Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2010 2011
Oct.01 Bank 8,00,000 Mar.31 Depreciation (6 months) 60,000
Mar.31 Balance c/d 7,40,000
8,00,000 8,00,000
2011 2012
Apr.01 Balance b/d 7,40,000 Mar.31 Depreciation 1,11,000
Mar.31 Balance c/d 6,29,000
7,40,000 7,40,000
2012 2013
Apr.01 Balance b/d 6,29,000 Mar.31 Depreciation 94,350
 Mar.31 Balance c/d 5,34,650
6,29,000 6,29,000
2013 2013
Apr.01 Balance b/d 5,34,650 Dec.31 Depreciation (9 months) 60,148
Dec.31 Profit and Loss (Profit) 25,498 Dec.31 Bank 5,00,000
5,60,148 5,60,148

Working Note for solution:

For 2010-2011

8, 00,000 x x = 60,000

For 2011- 2012

8, 00,000 – 60,000= 7, 40,000

7, 40,000 x = 1, 11,000

For 2012-2013

7, 40,000- 1, 11,000 = 6, 29,000

6, 29,000 x = 94,350

For 2013- 2014

6, 29,000 – 94,350 = 5, 34,650

5, 34,650 x x = 60,148

Book Value = 5, 34,650 – 60,148

= 4, 74,502

Profit on sale of truck = Sale Price – Book Value

= 5, 00,000 – 4, 74,502 = 25,498

Q14Written answer

Kapil Ltd. purchased a machinery on July 01, 2011 for ₹ 3, 50,000. It purchased two additional machines, on April 01, 2012 costing ₹ 1, 50,000 and on October 01, 2012 costing ₹ 1, 00,000. Depreciation is provided @10% p.a. on straight line basis. On January 01, 2013, first machinery become useless due to technical changes. This machinery was sold for ₹ 1, 00,000, prepare machinery account for 4 years on the basis of calendar year.

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The machinery account is created below:

Books of Kapil Ltd. 

Machinery Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2011 2011
Jul.01 Bank (i) 3,50,000 Dec.31 Depreciation (6 months) 17,500
Dec.31 Balance c/d 3,32,500
3,50,000 3,50,000
2012 2012
Jan.01 Balance c/d 3,32,500 Dec.31 Depreciation
Apr.01 Bank (ii) 1,50,000 (i) 35,000 (ii) 11,250 (9 months),
Oct.01 Bank (iii) 1,00,000 (iii) 2,500 (3 months) 48,750
Dec.31 Balance c/d
(i) 2,97,500, (ii) 1,38,750,
(iii) 97,500 5,33,750
5,82,500 5,82,500
2013 2013
Jan.01 (i) 2,97,500, (ii) 1,38,750, Jan.01 Bank (i) 1,00,000
(iii) 97,500 5,33,750 Jan.01 Profit and Loss (Loss) 1,97,500
Dec.31 Depreciation
(ii) 15,000 (iii) 10,000 25,000
Dec.31 Balance c/d
(ii) 1,23,750, (iii) 87,500 2,11,250
5,33,750 4,33,750
2014 2014
Jan.01 Balance c/d 2,11,250 Dec.31 Depreciation
(ii) 1,23,750, (iii) 87,500 Dec.31 (ii) 15,000, (iii) 10,000 25,000
Balance c/d
(ii) 1,08,750, (iii) 77,500 1,86,250
2,11,250 2,11,250
2015
Jan.01 Balance b/d 1,86,250

Hence, balance of machine account is ₹. 1, 86,250 and loss on sale of machine is ₹. 1, 97,500

Q15Written answer

On January 01, 2011, Satkar Transport Ltd, purchased 3 buses for ₹ 10, 00,000 each. On July 01, 2013, one bus was involved in an accident and was completely destroyed and ₹ 7, 00,000 were received from the Insurance Company in full settlement. Depreciation is written off @15% p.a. on diminishing balance method. Prepare bus account from 2011 to 2014. Books are closed on December 31 every year.

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The bus account is prepared below:

Books of Satkar Transport Ltd.

Bus Account
Dr. Cr.
Date Particulars J.F. Amount 

₹

 Date Particulars J.F. Amount 

₹
2011 2011
Jan.01 Bank 30,00,000 Dec.31 Depreciation 4,50,000
Dec.31 Balance c/d 25,50,000
30,00,000 30,00,000
2012 2012
Jan.01 Balance b/d 25,50,000 Dec.31 Depreciation 3,82,500
Dec.31 Balance c/d 21,67,500
25,50,000 25,50,000
2013 2013
Jan.01 Balance b/d 21,67,500 July.01 Depreciation (6 months) 54,187
July.01 Profit and Loss (Profit) 31,687 July.01 Insurance Co. (Insurance claim) 7,00,000
Dec.31 Depreciation 2,16,750
Dec.31 Balance c/d 12,28,250
21,99,187 21,99,187
2014 2014
Jan.01 Balance c/d 12,28,250 Dec.31 Depreciation 1,84,237
Dec.31 Balance c/d 10,44,013
12,28,250 12,28,250

Hence, the bus account balance is ₹. 10, 44,013.

Q16Written answer

On October 01, 2011 Juneja Transport Company purchased 2 Trucks for ₹ 10, 00,000 each. On July 01, 2013, One Truck was involved in an accident and was completely destroyed and ₹ 6, 00,000 were received from the insurance company in full settlement. On December 31, 2013 another truck was involved in an accident and destroyed partially, which was not insured. It was sold off for ₹ 1, 50,000. On January 31, 2014 Company purchased a fresh truck for ₹ 12, 00,000. Depreciation is to be provided at 10% p.a. on the written down value every year. The books are closed every year on March 31. Give the truck account from 2011 to 2014.

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The truck account is prepared below:

Books of Juneja Transport Company

 Truck Account
Dr. Cr.
Date Particulars J.F. Amount

 ₹

 Date Particulars J.F. Amount 

₹
2011 2012
Oct.01 Bank 20,00,000 Mar.31 Depreciation 1,00,000
Mar.31 Balance c/d 19,00,000
20,00,000 20,00,000
2012 2013
Apr.01 Balance b/d 19,00,000 Mar.31 Depreciation 1,90,000
Mar.31 Balance c/d 17,10,000
19,00,000 19,00,000
2013 2013
Apr.01 Balance b/d 17,10,000 Jul.01 Depreciation (3 Month on one Truck) 21,375
Jul.01 Bank (Insurance Claim) 6,00,000
2014 Jul.01 Profit and Loss (loss) 2,33,625
Jan.31 Bank 12,00,000
Dec.31 Depreciation (9 Month on II Truck) 64,125
Dec.31 Bank 1,50,000
Dec.31 Profit and Loss (Loss) 6,40,875
2014
Mar.31 Depreciation (2 Months) 20,000
Mar.31 Balance c/d 11,80,000
29,10,000 29,10,000

Working Note:

For 1st Truck

Opening Balance – Depreciation = Closing Balance
Oct.01, 2011 10,00,000 – 50,000 (6 Months) = 9,50,000
Apr.01, 2012 9,50,000 – 95,000 = 8,55,000
Apr.01, 2013 8,55,000 – 21,375 (3 Months) = 8,33,625
Value on July 01, 2013 = 8,33,625
Insurance Claim = –  6,00,000
Loss on 1st Truck = ₹ 2,33,625

For 2nd Truck

Opening Balance – Depreciation = Closing Balance
Oct.01, 2012 10,00,000 – 50,000 (6 Months) = 9,50,000
Apr.01, 2012 9,50,000 – 95,000 = 8,55,000
Apr.01, 2013 8,55,000 – 64,125 (9 Months) = 7,90,875
Value on Dec.31, 2013 = 7,90,875
Sale of Truck = –  1,50,000
Loss on 2nd Truck = ₹ 6,40,875

Hence, the loss on truck 1 and truck 2 are ₹ 2, 33,625 and ₹ 6, 40,875 respectively.

Q17Written answer

A Noida based Construction Company owns 5 cranes and the value of this asset in its books on April 01, 2017 is ₹ 40,00,000. On October 01, 2017 it sold one of its cranes whose value was ₹ 5, 00,000 on April 01, 2017 at a 10% profit. On the same day it purchased 2 cranes for ₹ 4, 50,000 each. Prepare cranes account. It closes the books on December 31 and provides for depreciation on 10% written down value.

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The cranes account is created below:

Cranes Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2017 2017
Apr.01 Machinery (35,00,000 + 5,00,000) 40,00,000 Oct.01 Depreciation 25,000
Oct.01 Profit and Loss (Profit) 47,500 Oct.01 Bank 5,22,500
Oct.01 Bank 9,00,000 Dec.31 Depreciation
35,00,000 × 10 × 9  = 2,62,500
100 12
9,00,000 × 10 × 6  = 22,500 2,85,000
100 12
Dec.31 Balance c/d
41,15,000
49,47,500 49,47,500

Working Note:

Original cost of Crane 1 = 5, 00,000

Accumulated Depreciation = Depreciation in 2011 – 2012

= 25,000

Book Value as on Oct 01, 2011

= Original Cost – Depreciation till Oct 01, 2011

= 5, 00,000 – 25,000

= 4, 75,000

Selling Price

= Book Value + 10% of Book Value

= 4, 75,000 + 10% of 4, 75,000

= 4, 75,000 + 47,500

= 5, 22,500

Profit on crane 1

= Sale Price – Book Value

= 5, 22,500 – 4, 75,000

= 47,500

Q18Written answer

Shri Krishnan Manufacturing Company purchased 10 machines for ₹ 75,000 each on July 01, 2014. On October 01, 2016, one of the machines got destroyed by fire and an insurance claim of ₹ 45,000 was admitted by the company. On the same date another machine is purchased by the company for ₹ 1, 25,000. The company writes off 15% p.a. depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the machinery account from 2014 to 2017.

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Worked solution

The machinery account is prepared below:

Books of Shri Krishna Manufacturing Company

Machinery Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2014 2014
Jul.01 Bank 7,50,000 Dec.31 Depreciation 56,250
Dec.31 Balance c/d 6,93,750
7,50,000 7,50,000
2015 2015
Jan.01 Balance b/d 6,93,750 Dec.31 Depreciation 1,04,063
Dec.31 Balance c/d 5,89,687
6,93,750 6,93,750
2016 2016
Jan.01 Balance b/d 5,89,687 Oct.01 Depreciation (9 months 6,634
for one machine)
Oct.01 Bank 1,25,000 Oct.01 Insurance Co. 45,000
Oct.01 Profit and Loss (Loss) 7,335
Dec.31 Depreciation
(i) 79,608, (ii) 4,688 84,296
Dec.31 Balance c/d
(i) 4,51,110, (ii) 1,20,312 5,71,422
7,14,687 7,14,687
2017 2017
Jan.01 Balance b/d Dec.31 Depreciation
(i) 4,51,110, (ii) 1,20,312 5,71,422 (i) 67,667, (ii) 18,047 85,714
Dec.31 Balance c/d
(i) 3,83,443, (ii) 1,02,265 4,85,708
5,71,422 5,71,422

 

Working Note:

Machine Costing ₹ 75,000 sold on Oct.01, 2016

Opening Balance – Depreciation = Closing Balance
Jul.01, 2014 75,000 – 5,625

(6 months)

 = 69,375
Jan.01, 2015 69,375 – 10,406 = 58,969
Jan.01, 2016 58,969 – 6,634

(9 months)

 = 52,335
Value on Oct.01, 2016 52,335
Insurance Claim – 45,000
Loss ₹ 7,335

Hence we see that the loss on the vehicle claim was ₹. 7,335, and the balance is ₹, 4, 85,708

Q19Written answer

On January 01, 2014, a Limited Company purchased machinery for ₹ 20, 00,000. Depreciation is provided @15% p.a. on diminishing balance method. On March 01, 2016, one fourth of machinery was damaged by fire and ₹ 40,000 were received from the insurance company in full settlement. On September 01, 2016 another machinery was purchased by the company for ₹ 15, 00,000.

Write up the machinery account from 2016 to 2017. Books are closed on December 31, every year.

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The machinery account is prepared as follows:

Machinery Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2016 2016
Jan.01 Balance b/d (i)

(10,83,750 + 3,61,250)

 14,45,000 Mar.01 Depreciation (1/4 Machine

for 2 Months)

 9,031
Sep.01 Bank (ii) 15,00,000 Mar.01 Bank 40,000
Mar.01 Profit and Loss 3,12,219
Dec.31 Depreciation (i)
(i) 1,62,563 (3/4th of  machine),

(ii) 75,000

 2,37,563
Dec.31 Balance c/d
(i) 9,21,187, (ii) 14,25,000 23,46,187
29,45,000 29,45,000
2017 2017
Jan.01 Balance b/d Dec.31 Depreciation
(i) 9,21,187, (ii) 14,25,000 23,46,187 Dec.31 (i) 1,38,177, (ii) 2,13,750 3,51,927
Balance c/d
(i) 7,83,009, (ii) 12,11,250 19,94,260
23,46,187 23,46,187

 

Working Note:

 

Machine (i)

Years January 01 Depreciation

(15% p.a.)

 = Closing Balance
2014 20,00,000 – 3,00,000 = 17,00,000
2015 17,00,000 – 2,55,000 = 14,45,000
2016 14,45,000

1/4th of Machine that was damaged (i)

Years Opening Balance Depreciation

(15% p.a.)

 = Closing Balance
2014 5,00,000 – 75,000 = 4,25,000
2015 4,25,000 – 63,750 = 3,61,250
2016 3,61,250 – 9,031 (2 months) = 3,52,219

 

Value on 1 Mar. 2016 = 3,52,219
Insurance Claim = 40,000
Loss ₹ 3,12,219

Hence, the loss on one-fourth of 1st machine is ₹, 3, 12,219 and the balance for the machine account is ₹.19, 94,260.

Q20Written answer

A Plant was purchased on 1st July, 2015 at a cost of ₹ 3, 00,000 and ₹ 50,000 were spent on its installation. The depreciation is written off at 15% p.a. on the straight line method. The plant was sold for ₹ 1, 50,000 on October 01, 2017 and on the same date a new Plant was installed at the cost of ₹ 4, 00,000 including purchasing value. The accounts are closed on December 31 every year.

Show the machinery account and provision for depreciation account for 3 years

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Worked solution

Machinery account and provision for depreciation account are shown below:

Plant Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2015 2015
July.01 Bank 3,50,000 Dec.31 Balance c/d 3,50,000
3,50,000 3,50,000
2016 2016
Jan.01 Balance b/d 3,50,000
Dec.31 Balance c/d 3,50,000
3,50,000 3,50,000
2017 2017
Jan.01 Balance b/d 3,50,000 Oct.01 Provision for Depreciation 1,18,125
Oct.01 Bank 4,00,000 Oct.01 Bank 1,50,000
Oct.01 Profit and Loss 81,875
Dec.31 Balance c/d 4,00,000
7,50,000 7,50,000
Provision for Depreciation Account
Dr. Cr.
Date Particulars J.F. Amount

₹

 Date Particulars J.F. Amount

₹
2015 2015
Dec.31 Balance c/d 26,250 Dec.31 Depreciation 26,250
26,250 26,250
2016 2016
Dec.31 Balance b/d 78,750 Jan.01 Balance c/d 26,250
Dec.31 Depreciation 52,500
78,750 78,750
2017 2017
Oct.01 Plant 1,18,125 Jan.01 Balance b/d 78,750
 Dec.31 Balance c/d 15,000 Oct.01 Depreciation (i) (9 months) 39,375
Dec.31 Depreciation (ii) (3 months) 15,000
1,33,125 1,33,125

Hence, the loss on sale of plant is ₹ 81,875 and the balance of machine account is ₹. 4, 00,000.