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CBSE Class 11-commerce Answered

ABC Ltd. purchased a second hand car from XYZ Ltd. on 31st December 2014 for ₹475000 and incurred ₹25000 on its overhauling. Another car was purchased on 31st March 2015 for ₹420000. On 31st July 2016 a part of car purchased on 31st December 2014 (original cost ₹80000) was sold off for ₹65000 and the company paid commission of ₹1000 to broker who helped to execute the sale. Another car was purchased on 1st January 2017 for ₹50000. Depreciation is to be charged @20% p.a. on reducing balance method. Prepare vehicles account from 2014-2015 to 2017-2018. Please help me to solve this question

Asked by madhavsarpanch | 26 Nov, 2019, 06:02: PM

Expert Answer

Reducing Balance Method of computing depreciation:

It is also known as Fixed Percentage on Diminishing Balance Method or Written Down Value Method.
Under this method, a fixed rate on the written down value of the asset is charged as depreciation every year over the expected useful life of the asset.
The depreciation is charged on the book value of the asset and the amount of depreciation reduces year after year.

Complete solutions along with the detailed workings for the Reducing Balance Method of Depreciation are provided under text book solutions at the below mentioned link:

https://www.topperlearning.com/study/cbse/class-11-commerce/accountancy/text-book-solutions/financial-accounting/571/depreciation/2910/b101c503s549e9

Answered by Surabhi Gawade | 27 Nov, 2019, 09:41: AM

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