DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : Y. Yella Reddy
Designation : HCCP
Branch : DCCP
Institute :026,S.G.Govt.Polytechnic,Adilabad
Year/Semester : III Semester
Subject : Accountancy-II
Subject Code : CCP-302
Topic : Depreciation
Duration : 50 Min.
Sub Topic : Problems on Fixed Instalment
Method
Teaching Aids : Animations
CCP302.25 1
Objectives

On completion of this period you would be

able to know:

 The Calculation of Depreciation under Fixed

Instalment / Straight Line Method.

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Recap:

In the last class we learned about the

calculation of :

 Depreciation under Fixed Instalment Method.

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Illustration

 On 1-1-2004 a Firm purchases machinery worth

Rs.60,000.
 The accounts are closed on 31st December each
year
 Assuming the annual depreciation at 10%.
 Show the machinery account for 3 years under Fixed
Instalment Method.

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Solution
Machinery Account

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1. A plant was bought for Rs. 9,500, its installation
cost was Rs. 500.
Show ,how it will be depreciated by Fixed Instalment
Method.
Its working life is for 10 years.
What would be its balance after 5 years if 10%
depreciation is charged.

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Solution:
(Depreciation = Cost of asset X Rate of depreciation
/100)
Cost of asset = Original cost + Installation cost
=(9500+500) = 10,000
Rate of depreciation = 10%
Depreciation = 10000 X 10/100 = Rs. 1,000
Every year provision is made for depreciation Rs. 1,000.

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 Plant Account
Date Particulars Rs. Date Particulars Rs.
1st To cash a/c 9,500 1st By Depreciation 1,000
year To cash a/c 500 year By Balance c/d 9,000
(expenses)
10,000 10,000

2nd To balan b/d 9,000 2nd By Depreciation 1,000

year year By Balance c/d 8,000
9,000 9,000

3rd To bal b/d 8,000 3rd By Depreciation 1,000

year year By Balance c/d 7,000
8,000 8,000
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 Plant Account
Date Particulars Rs. Date Particulars Rs.

4th To balance b/d 7000 4th Depreciation 1000

year year ”Balance c/d 6000
7000 7000

5th To balance b/d 6000 5th Depreciation” 1000

year year balance c/d 5000
6000 6000

6th To balance b/d 5000

year
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Summary:

 So far we have learnt:

 The calculation of depreciation under Fixed
instalment/ straight line method.
 The preparation of the asset account for 5 years

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Assignment
 1. Rama purchased Machinery worth
Rs.32,000/-.
 He spent Rs.2,000/- towards installation
charges.
 He charges Depreciation @20% per annum
on Straight Line Method.
 Prepare Machinery Account for Five years,if
the scrap value is Rs.4,000.

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