Also give the necessary journal entries. . Explain determinants of the amount of depreciation. .
Name and explain different types of reserves in details. . What are ‘provisions’. How are they created?
Give accounting treatment in case of provision for doubtful Debts. Numerical Problems . On April , , Bajrang Marbles purchased a Machine for Rs. , , and spent Rs.
, on its carriage and Rs. , on its installation. It is estimated that its working life is years and after years its scrap value will be Rs. , .
(a) Prepare Machine account and Depreciation account for the first four years by providing depreciation on straight line method. Accounts are closed on March 31st every year. (b) Prepare Machine account, Depreciation account and Provision for depreciation account (or accumulated depreciation account) for the first four years by providing depreciation using straight line method accounts are closed on March every year. (Ans: [a] Balance of Machine account on April , Rs.
, , . [b] Balance of Provision for depreciation account as on . . Rs.
, .) . On July , , Ashok Ltd. Purchased a Machine for Rs. , , and spent Rs.
, on its installation. At the time of purchase it was estimated that the effective commercial life of the machine will be years and after years its salvage value will be Rs. , . Prepare machine account and depreciation Account in the books of Ashok Ltd.
For first three years, if depreciation is written off according to straight line method. The account are closed on December 31st, every year. (Ans: Balance of Machine account as on . .
Rs. , ). . Reliance Ltd.
Purchased a second hand machine for Rs. , on October , and spent Rs. , on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for Rs.
, at the end of its useful life of years. Moreover an estimated cost of Rs. , is expected to be incurred to recover the salvage value of Rs. , .
Prepare machine account and Provision for depreciation account for