The time period for which an asset can be used efficiently is known as ____________ of an asset.

___________ method, is also known as original cost method or fixed instalments method.

_________________ method, the amount spent on the purchase of an asset is regarded as an investment.

_________________ means exhaustion of natural resources.

The wear and tear of most of the fixed assets leads to ____________ of that asset.

What is sinking fund method?

A firm purchased a plant for Rs. 40,000. Erection charges amounted to Rs. 2,000. Effective life of the plant is 5 years. Calculate the amount of depreciation per year under straight line method

Find out the rate of depreciation under straight line method from the following details:
Original cost of the asset = Rs.10,000
Estimated life of the asset = 10 years
Estimated scrap value at the end = Rs.2,000

What is Depletion Method?

Define Depreciation.

State the advantages and limitations of written down value method of depreciation.

Machinery was purchased on 1^st January 2015 for Rs. 4,00,000. Rs. 15,000 was spent on its erection and Rs. 10,000 on its freight charges. Depreciation is charged at 10% per annum on straight line method. The books are closed on 31^st March each year. Calculate the amount of depreciation on machinery for the first two years.

On 1st April 2015, Kumar purchased a machine for Rs.80,000 and spent Rs.20,000 on its installation. The residual value at the end of its expected useful life of 8 years is estimated at Rs.4,000. On 30th September 2017, the machine is sold for Rs.50,000. Depreciation is to be provided according to straight line method. Prepare Machinery Account. Accounts are closed on 31st December every year.

A Motor car was purchased on 1st January, 2013 for Rs. 25,000, depreciated at 10% on diminishing balance method. It was, sold for Rs.16,500 on 3^st December, 2015, Prepare motor car account. The accounts are closed on 31^st December every year.

A furniture costing Rs. 5,000 has been purchased on 1.1.2011, the installation charges being Rs. 1,000. The furniture is to be depreciated @10% p.a on the diminishing balance method. Show the furniture account and depreciation account for the first three years.

Ragul purchased machinery on April 1, 2014 for Rs. 2,00,000. On 1st October 2015, a new machine costing Rs. 1,20,000 was purchased. On 30th September 2016, the machinery purchased on April 1, 2014 was sold for Rs. 1,20,000. Books of accounts are closed on 31st March and depreciation is to be provided at 10% ap.a. on straight line method. Prepare machinery account and depreciation account for the years 2014-15 to 2016-17:

Anand bought a machinery for Rs.1,00,000 on 1-1-2015. On 1-6-2016, he bought another machine for Rs.50,000. On 1-10-2017, he purchased another machine for Rs.20,000. Provide depreciation at 10% p.a. on straight line method. Prepare machinery account for the years 2015 to 2017 by using accounts by assuming accounts are closed on 31^st December every year.

Ganesh & Co. purchased a Machinery worth Rs. 3,00,000 on 1^st October 2010. They spent 20,000 on its erection. The firm writes off depreciation at the rate of 10% on the original cost every year. The books are closed on 31^st March of every year. Prepare machinery account and depredation account for three years.

A company purchased machinery on 1.4.2012 for Rs. 50,000. Depreciation is 10%. Accounts are closed on 31^st March every year. Prepare machinery account and depreciation account under straight line method and also under written down value method.