M/s Omkar Enterprise Jalgoan acquired a printing machine for ₹75,000 on 1st Oct 2015 and spent ₹5,000 on its transport and installation. Another Machine for ₹45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on written Down Value Method, on 31st march every year. Prepare Printing Machine Account for the first four years. Prepare Printing Machine Account for the first four years.

Practical Problems on Written Down Value Method


1. M/s Omkar Enterprise Jalgoan acquired a printing machine for ₹75,000 on 1st Oct 2015 and spent ₹5,000 on its transport and installation. Another Machine for ₹45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on written Down Value Method, on 31st march every year.


Prepare Printing Machine Account for the first four years.

Solution:
In the Books Of M/s Omkar enterprise Jalgoan

Printing Machine Account
  
Date Particulars JF Amount Date Particulars JF Amount 
2015    2016    
1st
Oct 		To Cash/Bank A/c  80,000 31st
March 		By Depreciation   8,000 
    31st
march 		By Balance c/d  72,000 
   80,000    80,000 
2016    2017    
1st
April 		To Balance b/d  72,000 31st
March 		By Depreciation   16,650 
        
2017        
1st
Jan 		To Cash / Bank A/c  45,000 31st
March 		By Balance c/d  1,00,350 
        
   1,17,000    1,17,000 

2017    2018    
1st
April 		To Balance b/d  1,00,350 31st
March 		By Depreciation  20,070 
        
    31st
March 		By Balance c/d  80,280 
        
   1,00,350    1,00,350 
2018    2019    
1st
April 		To Balance b/d  80,280 31st
March 		By Depreciation  16,056 
    31st
march 		By Balance c/d  64,224 
        
   80,280    80,280 
        
Calculation & Explanation:

In the Written Down Value Method depreciation is charged on the original value of Machine in first year and from the second or next year it is charged on opening balance of every year.

1. Machine purchased on 1st Oct 2015 (M1)
75,000 (+) 5,000 = 80,000
80,000*20%*6/12= 8,000/-

2. (M1) 31st March 2017
 72,000*20% = 14,400/- 

Machine purchased on 1st Jan 2017 (M2)
45,000*20%*3/12 = 2,250/-

3. (M1) 31st March 2018
57,60*20% = 11,520/-

(M2) 31st march 2018
42,750*20% = 8,550/-

4. (M1) 31st march 2019
46,080*20% = 9,216/-

(M2) 31st march 2019
34,200*20% = 6,800/-

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