ACCOUNTING FOR DEPRECIATION

STRUCTURE

Objectives
Introduction
Causes of Depreciation
Need for Providing Depreciation
Basic Elements of Depreciation
Methods of recording depreciation

Methods of calculating depreciation

Straight Line Method

Diministing Balance Method
Sum of Years digits (SYD) Method
Annuity Method
Depreciation Fund Method
OBJECTIVES

After going through this lesson, you should be able to-

· Know the meaning, need and causes of depreciation.
· Know the different methods of charging depreciation.
· Understand the accounting treatment of charging
depreciation.

INTRODUCTION

The term depreciation refers to the reduction in or loss of quality or

value of a fixed asset through wear or tear in or tear, in use, effusion of
time, obsolescence through technology and market changes or from any
other cause. Depreciation take place in case of all fixed assets with
certain possible exceptions e.g. land and antiques etc, although the
process may be invisible or gradual. Depreciation does take place
irrespective of regular repairs and proper maintenance of assets. The
word ‘depreciation’ is closely related to the concept of business income.
Unless it is charged against revenues, we cannot say that the business
income has been ascertained properly. This is because of the fact that the
use of long term assets tend to consume their economic value and at
some point of time these assets become useless. The economic value so
consumed must be recovered from the revenue of the firm to have a
proper measure of its income. Hence, the reader’s must understand that
the process of charging depreciation is the technique used by
accountants for recovering the cost of fixed assets over a period.

The following definition will make the understanding of the concept

of depreciation more convenient to the learner’s. According to IAS-4,
“Depreciation is the allocation of the depreciable amount of an asset over
its estimated useful life,”
According to AS-6, “depreciation is a measure of wearing out,
consumption or other of value of a depreciable asset arising from use,
effusion of time or obsolescence through technology and market changes.
Depreciation is allocated so as to charge a fair proportion of the
depreciable amount in each accounting period during the expected useful
life of the assets. Depreciation includes amortisation of assets whose
useful life is pre determined.”

The American Institute of Certified Public Accountants (AICPA)

employed the definition as given below

“Depreciation Accounting is a system of accounting which aims to

distribute the cost or other basic value of tangible capital assets, less
salvage value (if any) over the estimated useful life of unit (which may be
a group of assets) in a systematic and retional manner. It a process of
allocation, not of valuation. Depreciation for the year is the portion of the
total charge under such a system that is allocated to the year.”

From the above definitions it is clear that each accounting period

must be charged with a fair proportion of the depreciable amount of the
asset, during the expected useful life of the asset. Depreciable amount of
an asset is its historical cost less the estimated residual value. Finally, it
could be concluded that depreciation is a gradual reduction in the
economic value of an asset from any cause.

Depreciation, Depletion and Amortisation: The terms

depreciation, depletion and amortisation are used often interchangeably.
However, these different terms have been developed in accounting usage
for describing this process for different types of assets. These terms have
been described as follows:

Depreciation: Depreciation is concerned with charging the cost of

man made fixed assets to operation (and not with determination of asset
value for the balance sheet). In other words, the term ‘depreciation’ is
used when expired utility of physical asset (building, machinery, or
equipment) is to be recorded.

Depletion: This term is applied to the process of removing an

available but irreplaceable resource such as extracting coal from a coal
miner or oil out of an oil well. Depletion differs from depreciation in that
the former implies removal of a natural resource, while the latter implies
a reduction in the service capacity of an asset.

Amortisation: The process of writing off intangible assets is

termed as amortisation. The intangible assets like patents, copyrights,
leaseholds and goodwill are recorded at cost in the books of account.
Many of these assets have a limited useful life and are, therefore, written
off.

Obsolescence: It refers to the decline in the useful life of an asset

because of factors like (i) technological advancements, (ii) changes in the
market demand of the product, (iii) legal or other restrictions, or
(iv) improvement in production process.

CAUSES OF DEPRECIATION

The depreciation occurs because of the following:

1. Constant use: The constant use of assets results into their

wear and tear, which in turn reduces their working capacity.
Hence, a decrease in the value of assets may be seen due to
reduced capacity. The value of assets like, machinery,
furniture, etc., declines with the constant use of them.

2. Passage of Time: Many fixed assets lose their value with the
passage of time. This holds true in case of intangible fixed
assets such as patents, copy rights, lease hold properties,
etc. The term “amortisation” is generally used to indicate the
reduction in the value of such assets.

3. Depletion: Depletion also causes decline in the value of

certain assets. This is true in case of wasting assets such as
mines, oil wells and forest-stands. On account of continuous
extraction of minerals or oils, these assets go on declining in
their value and finally they gets completely exhausted.

4. Obsolescence: There may not be any physical deterioration

in the asset itself. Despite of this there may be reduction in
the utility of an asset that results from the development of a
better method, machine or process. For example, an old
machine which is still in good working condition may have to
be replaced by a new machine because of the later being
more economical as well as efficient. In fact, new inventions,
developments in production processes, changes in demand
for product or services, etc. make the asset out of date.

5. Accidents: An asset may get reduction in its value if it meets

an accident.

6. Permanent Fall in the Market Value: Certain assets may

get permanent fall in their value and this decline in their
value is treated as depreciation. For example, a permanent
decline in the market value of securities and investment may
be assumed as depreciation

NEED FOR PROVIDING DEPRECIATION

The need for providing depreciation arises on account of the

following points:
1. To Ascertain the Profits or Losses: The true profits or
losses could be ascertained when all costs of earning
revenues have been properly charged against them. Fixed
assets like building, plant and machinery, furniture, motor
vehicles etc are important tool in earning business income.
But the cost of the fixed asset is not charged to profit and
loss of the accounting period in which the asset is
purchased. Therefore, the cost of the fixed asset less its
salvage value must be allocated rationally to the periods that
receive benefit from the use of the asset. Thus, depreciation
is an item of business expense and must be provided for a
proper matching of costs with the revenue.

2. To show the Asset as its Reasonable Value: The assets get

decrease in their value over a period of time on account of
various such as passage of time, constant use, accidents,
etc. Therefore, if the depreciation is not charged then the
asset will appear in the balance sheet at the over stated
value. This practice is unfair as the balance sheet fail to
present the true financial position.

3. Replacement of assets: Business assets become useless at

the expiry of their life and, therefore, need replacement. The
cash resources of the concern are saved from being
distributed by way of dividend by providing for depreciation.
The resources so saved, if set aside in each year, may be
adequate to replace it at the end of life of the asset.

4. To Reduce Income Tax: If tax is paid on the business

income without providing for depreciation then it will be in
excess to the actual income tax. This is a loss to the business
man. Thus, for calculating tax, depreciation should be
deducted be from income similar to the other expenses.

BASIC ELEMENTS OF DEPRECIATION

In order to assess depreciation amount to be charged in respect of

an asset in an accounting period the following three important factors
should be considered:

1. Cost of the asset: The knowledge about the cost of the asset
is very essential for determining the amount of depreciation
to be charged to the profit and loss account. The cost of the
asset includes the invoice price of the asset less any trade
discount plus all costs essential to make the asset usable.
Cost of transportation and transit insurance are included in
acquisition cost. However, the financial charges such as
interest on money borrowed for the purchase for the
purchase of the asset should no be included in the cost of
the asset.

2. Estimated life of the asset: Estimated life generally means

that for how many years or hours an asset could be used in
business with ordinary repairs for generating revenues. For
estimating useful life of an asset one must begin with the
consideration of its physical life and the modifications, if any,
made, factors of obsolescence and experience with similar
assets. In fact, the economic life of an asset is shorter than
its physical life. The physical life is based mostly on internal
policies such as intensity of use, repairs, maintenance and
replacements. The economic life, on the other hand, is based
mostly on external factors such as obsolescence from
technological changes.
3. Scrap Value of the Asset: The salvage value of the asset is
that value which is estimated to be realised on account of the
sale of the asset at the end of its useful life. This value
should be calculated after deducting the disposal costs from
the sale value of the asset. If the scrap value is considered as
insignificant, it is normally regarded as nil

METHODS OF RECORDING DEPRECIATION

There are two methods of recording depreciation in the books of

accounts:

When a provision for depreciation account is maintained

The following journal entries are passed in case method is followed:

i) Depreciation account Dr.

To provision for Depreciation
Account
(for providing depreciation)
ii) Profit and loss Account Dr.
To Depreciation account
(for closing depreciation account)
iii) Provision for Depreciation account Dr.
To Asset Account
(entry on sale of an asset)
iv) Any amount realised on account of sale of the asset is
credited to the Asset Account. The balance, if any, in the
Asset Account is transferred to the profit and loss Account.

When a provision for depreciation account is not

maintained

The following journal entries are passed in this method:

i) Depreciation account Dr.
To Asset Account
(Entry for providing depreciation)
ii) Profit and loss Account Dr.
To Depreciation Account
(Entry for closing Depreciation Account)
iii) In case the asset is sold, the amount realised is credited to
the Asset Amount. Any profit or loss on sale of the asset is
transferred to the Profit and loss account.

METHODS OF CALCULATING DEPRECIATION

The following are various methods of depreciation in use:

1. Fixed instalment method or straight line method.
2. Machine hour rate method.
3. Diministing Balance method.
4. Sum of years digits method
5. Annuity method
6. Depreciation Fund Method
7. Insurance Policy Method
8. Depletion Method.

Straight Line Method

This is also known as fixed instalment method. Under this method

the depreciation is charged on the uniform basis year after year. When
the amount of depreciation charged yearly under this method is plotted
on a graph paper, we shall get a straight line. Thus, the straight line
method assumes that depreciations is a function, of time rather than use
in the sense that each accounting period received the same benefit from
using the asset as every other period. The formula for calculating
depreciation charge for each accounting period is:
Amount of annual Depreciation =
Original cost of the fixed assets – Residual value
Estimated Life in years

For example, if an asset cost Rs. 50,000 and it will have a residual
value of Rs. 2000 at the end of its useful life of 10 years, the amount of
annual depreciation will be Rs. 4800 and it will be calculated as follow:

Rs. 50,000 – 2000

Depreciation = = Rs. 4800
10 Years

This method has many shortcomings. First, it does not take into
consideration the reasonal fluctuations, booms and depression. The
amount of depreciation is the same in that year in which the machine is
used day and night to that in the another year in which it is used for
some months. Second, it ignores the interest on the money spent on the
acquisition of that asset. Third, the total charge for use of asset (i.e.,
depreciation and repairs) goes on increasing form year to year though the
assets might have been use uniformly from year to year. For example,
repairs cost together with depreciation charge in the beginning years is
much less than what it is in the later year. Thus, each subsequent year is
burdened with grater charge for the use of asset on account of increasing
cost on repairs.

Illustration: H. Ltd. purchased a machinery on 1st January 1990

for Rs. 29000 and spent Rs. 2000 on its carriage and Rs. 1,000 on its
erection. Machinery is estimated to have a scrap value of Rs. 5000 at the
end of its useful life of 5 year. The accounts are closed every year on 31st
December. Prepare the machinery account for five years charging
depreciation according to straight line method.

Solution

MACHINERY ACCOUNT
Date Particulars Rs. Date Particulars Rs.
1990 To Bank 22000 Dec. 31 By Depreciation 4000
Jan. 1 To Bank 2000 “ By Balance C/d 21000
To Bank 1000
25000 25000
1991 To Balance b/d 21000 1991 By Depreciation 4000
Jan.1 Dec.31 Balance c/d 17000
21000 21000
1992 To Balance/b/c 17000 1992 By Depreciation 4000
Jan.1 Dec. 31 By Balance c/d 13000
17000 17000
1993 To Balance b/c 13000 1993 By Depreciation 4000
Jan.1 Dec.31 By Balance 9000
13000 13000
1994 To Balance b/d 9000 1994 By Depreciation 4000
Jan.1 Dec.31 By Balance c/d 5000
9000 9000

This method is very suitable particularly in case of those assets

which get depreciated more on account of expire of period e.g. lease hold
properties, patents, etc.
Diministing Balance Method

This is also known as Written down value method [WDV]. Under

the diminishing balance method depreciation is charged at fixed rate on
the reducing balance (i.e., cost less depreciation) every year. Thus, the
amount of depreciation goes on decreasing every year. Under this method
also the amount of depreciation is transferred to profit and loss account
in each of the year and in the balance sheet the asset is shown at book
value after reducing depreciation from it. For example, if an asset is
purchased for Rs. 10,000 and depreciation is to be charged at 20% p.a.
on reducing balance system then the depreciation for the first year will be
Rs. 2000. In the second year, it will Rs. 1600 (i.e. 20% of 8000), in the
third year Rs. 1280 (i.e. 20% of 6400) and so on. The rate of depreciation
under this method can be computed by using the following formula:
Net scrap value
Depreciation rate = –1
Acquisition cost

For example, if the cost of an asset is 27000, scrap value Rs. 3375,
economic life 3 year, the rate of depreciation would be:

3375
Depreciation Rate = 1 – 3
27000

15
=1– = 50%
30

Merits of Diministing Balance Method

(i) It is very easy to understand and calculate the amount of

depreciation despite the early variation in the book value after
depreciation (ii) This method put an equal burden for use of the asset on
each subsequent year since the amount of depreciation goes on
decreasing for each subsequent year while the charge for repairs goes on
increasing for each subsequent year. (iii) This method has also been
approved by the income tax act applicable in India (iv) Asset is never
reduced to zero because if the rate of depreciation is (say) 20%. Then
even when asset is reduced to very small value, there must remain the
80% of that small value as on written off balance.

Demerit

(i) It ignores the interest on the capital committed to purchase that

asset. (ii) It does not provide adequately for replacing the asset at the end
of its life. (iii) The calculation of rate of depreciation is not so simple. (iv)
The formula for calculating the rate of depreciation can be applied only
when there is some residual of the asset.
Suitability

This method is suitable in those cases where the receipts are

expected to decline as the asset gets older and, it is believed that the
allocation of depreciation of depreciation ought to be related to the
pattern of assets expected receipts.

Illustration 2: A company purchases Machinery on 1st April 1990

for Rs. 20,000. Prepare the machinery account for three years charging
depreciation @ 25% p.a. according to the written Down value Method.

MACHINERY ACCOUNT
Date Particulars Rs. Date Particulars Rs.
1990 To Bank 20000 1991 By Depreciation 5000
Apr. 1 Mar. 31 By Balance C/d 15000
20000 20000
1991 To Balance b/d 15000 1992 By Depreciation 3750
Apr.1 Mar.31 By Balance c/d 11250
15000 15000
1992 To Balance b/d 11250 1993 By Depreciation 2812.5
Apr 1 Mar.31 By Balance c/d 8437.5
11250 11250

Sum of Years digits (SYD) Method

Under this method also the amount of depreciation goes on

diministing in the future years similar to that under diministing Balance
method.

For calculating the amount of depreciation to be charged to the

profit and loss account this method takes into account cost, scrape
value, and life of the asset. The following formula is used for determining
depreciation:

= Remaining life of the Assets at the end of the year + 1 ´ Acquisition Cost
Sum of the digits representing the life of the asset
For example, an asset having an effective life of 5 years is
purchased at a cost of Rs. 20,000. It is estimated that its scrap value at
the end of its effective life will be Rs. 2000. The depreciation on this
asset, if SYD method is followed, will be calculated as follows from one to
five years:
Year Depreciation Amount
5
1 = × 18000 = Rs. 6000
15
4
2 = × 18000 = Rs. 4800
15
3
3 = × 18000 = Rs. 3600
15
2
4 = × 18000 = Rs. 2400
15
1
5 = × 18000 = Rs. 1200
15

Annuity Method

Sofar we have described such methods of charging depreciation

which ignore the interest factor. Also, some times it becomes
inconvenient for a company to follow any of the methods discussed
earlier. Under such circumstances the company may use some special
depreciation systems. Annuity method is one of these special systems of
depreciation. Under this system, the depreciation is charged on the basis
that besides losing the acquisition cost of the asset the business also
loses interest on the amount used for purchasing the asset. Here,
interest refers to that income which the business would have earned
otherwise if the money used in buying the asset would have been
committed in some other profitable investment. Therefore, under the
annuity method the amount of total depreciation is determined by adding
the cost and interest thereon at an expected rate. The annuity table is
used to help in the determination of the amount of depreciation. A
specimen of Annuity Table is as follows:
ANNUITY TABLE
Year 3% 4% 5% 6%
4 0.269027 0.275490 0.282012 0.288591
5 0.218335 0.224627 0.230975 0.237376
6 0.184598 0.190762 0.197012 0.203363
7. 0.160506 0.166610 0.172820 0.179135
8. 0.142456 0.148528 0.154722 0.161036
9. 0.128434 0.134493 0.140690 0.147022
10. 0.117231 0.12391 0.129505 0.135868

In case depreciation is charged according to this method, the

following accounting entries are passed:

(i) Purchase of an asset

Asset Account Dr.
To Bank
(ii) For Charging interest
Asset Account Dr.
To Interest Account
(iii) For Charging depreciation:
Depreciation Account Dr.
To Asset Account

Evaluation of Annuity Method

Merits

(i) This method keep into account interest on money spent on

the purchase of the asset.

(ii) The value of the asset become zero at the end of life.
Demerits

(i) This method is comparatively more difficult than the

methods discussed so far.
(ii) It makes no arrangement of money to replace the old asset
with the new one at the expiry of its life.
(iii) Under this method the burden on the profit and loss account
is no similar in each year because the depreciation remains
constant year after year but the interest goes on decreasing.

Illustration: On 1st January, 1990 a firm purchased a leasehold

property for 4 year at a cost of Rs. 24000. It decides to depreciate the
lease by Annuity Method by charging interest at 5% per annum. The
Annuity Table shows that the annual necessary to write off Rs. 1 at 5%
Rs. 0.282012. You are required to prepare the lease Hold Property
Account for four years and show the net amount to be charged to the
profit and loss account for these four years.

LEASE HOLD PROPERTY ACCOUNT

Date Particulars Rs. Date Particulars Rs.
1990 To Bank 24000.00 1990 By Depreciation 6768.29
Jan. 1 Dec. 31
To interest 1200.00 Dec.31 By balance c/d 18431.71
25200.00 25200.00
1991 To balance b/d 18431.71 1991 By Depreciation 6768.29
Jan.1 Dec.31
Dec.31 To Interest 921.59 Dec.31 By Balance c/d 12585.01
19353.30 19353.30
1992 To balance b/d 12585.01 1992 By Depreciation 6768.29
Jan.1 Dec.31
Dec. 31 To Interest 629.25 Dec.31 By Balance c/d 6445.97
13214.26 13214.26
1993 To balance b/d 6445.97 1993 By Depreciation 6768.29
Jan.1 Dec.31 By Balance c/d 9000
Dec.31 To Interest 322.30 13000
6768.27 6768.27
NET AMOUNT CHARGEABLE TO THE PROFIT AND LOSS ACCOUNT
Year Depreciation debited Interest Credited Net Charge against Profit
1990 6768.29 1200.00 5568.29
1991 6768.29 921.59 5846.70
1992 6768.29 629.25 6139.04
1993 6768.29 322.30 6445.99
Rs. 27073.16 3073.14 24000.02

Depreciation Fund Method

Business assets become useless at the expiry of their life and

therefore, need replacement. However, all the methods of depreciation
discussed above do not help in accumulating the amount which can be
readily available for the replacement of the asset its useful life comes to
an end Depreciation fund method takes care of such a contingency as it
incorporates the benefits of depreciating the asset as well as
accumulating the necessary amount for its replacement. Under this
method, the amount of depreciation charged from the profit and loss
account is invested in certain securities carrying a particular rate of
interest. The interest received on the investment in such securities is also
invested every year together with the amount of annual depreciation. In
the last of the life of asset the depreciation amount is set aside interest is
received as usual. But the amount is not invested because the amount is
immediately needed for the purchase of new asset. Rather all the
investments so far accumulated are sold away. Cash realised on the sale
of investments is utilised for the purchase of new asset. The following
accounting entries are generally made in order to work out this system of
depreciation.

1. At the end of the first year

(i) for setting aside the amount of depreciation: The amount to

be charge by way of depreciation is determined on the basis
of sinking Fund Table given as an Appendix at the end of
every book of accountancy.
Depreciation Account Dr.
To Depreciation Fund Account (or Sinking Fund A/c)
(ii) For investing the amount charged by way of depreciation:
Depreciation Fund Investment A/c Dr.
To Bank A/c

2. In the second and subsequent years

(i) For receiving interest. The interest on the balance of

Depreciation Fund Investment outstanding in the beginning
of each year will be received by the end of the year. This
entry is:
Bank Account Dr.
To Depreciation Fund Account
(ii) For setting aside the amount of depreciation
Profit and Loss A/c Dr.
To Depreciation Fund A/c
(iii) For investing the amount
Depreciation Fund Investment A/c Dr.
To Bank A/c
(Annual instalment of depreciation and interest received
invested)

3. In the last year

(i) For receiving interest:

Bank A/c Dr.
To Depreciation Fund A/c
(ii) For setting aside the amount of depreciation
Profit and loss A/c Dr.
To depreciation Fund A/c
Note: In the last year no investment will be made, because the
amount is immediately required for the purchase of new asset.
(iii) For the sale of investment:
Bank A/c Dr.
To Depreciation Fund Investment A/c
(iv) For the transfer of profit or loss on sale on investments: The
profit or loss on the sale of these investments is transferred
to the Depreciation Fund Account.
The entry for loss:
Depreciation Fund A/c Dr.
To Depreciation Fund Investment A/c
The entry for profit
Depreciation Fund Investment A/c
To Depreciation Fund A/c
(v) For the sale of old asset:
Bank A/c Dr.
To asset A/c
(vi) The depreciation fund is transferred to asset account and
any balance left in the asset account is transferred to profit
and loss account. The entry is:
Depreciation Fund A/c. Dr.
To asset A/c
(vii) The balance in Asset Account represents profit or loss.
Therefore it will be transferred to the profit and loss account.
(viii) The cash realised on the sale of investments and the old
asset is utilised for the purchase of new asset.

Illustration: Amitabh Company Ltd. purchased 4 year lease on

January , 1990 for Rs. 60,000. The company decided to charge
depreciation according to depreciation fund method. It is expected that
investments will earn interest @5% p.a. Sinking Fund Table shows that
Rs. 0.232012 invested each year will produce Rs. 1 at the ent of 4 years
at 5% p.a. At the expiry of lease , the Depreciation Fund Investments
were sold for Rs. 45200. A new lease is purchased for Rs. ................ on
1.1.1994. Show the journal entries and prepare the necessary accounts
in the book the company.

JOURNAL
Date Particulars Debit Credit
1.1.1990 Lease A/c Dr. 60,000
To Bank A/c 60,000
(Being the purchase of lease)
31.12.90 Depreciation A/c Dr. 13920.7
To Depreciation Fund A/c 13920.7
(Being annual amount of depreciation as
per sinking fund tables)
31.12.90 Depreciation Fund Investment A/c Dr. 13920.7
To Bank A/c 13920.7
(Being purchase of the investments
against the depreciation fund)
31.12.91 Bank A/c Dr. 696.0
To depreciation fund A/c 696.0
(Being the receipt of interest on
depreciation fund investment A/c transfer
to depreciation fund A/c
31.12.91 Depreciation A/c Dr. 13920.7
To Depreciation Fund A/c 13920.7
(Being annual depreciation set-aside)
31.12.91 Depreciation Fund Investment A/c Dr. 14616.7
To Bank A/c 14616.7
(Being purchase of the investments
against the depreciation fund)
31.12.92 Bank Account Dr. 1426.9
To depreciation fund A/c 1426.9
Being receipt of interest and its transfer to
depreciation fund A/c)
31.12.92 Depreciation A/c Dr. 13920.7
To depreciation fund A/c 13920.7
(Being annual depreciation set aside)
31.12.92 Depreciation Fund Investment A/c Dr. 15347.6
To Bank A/c 15347.6
(Being purchase of investments)
31.12.93 Bank A/c Dr. 2194.3
To depreciation fund A/c 2194.3
(Being receipt of interest on depreciation
fund investment)
31.12.93 Depreciation A/c Dr. 13920.7
To depreciation A/c 13920.7
(Being annual depreciation set aside)
31.12.90 Bank A/c Dr. 45200
To depreciation fund investment A/c 45200
(Being sale of Dep fund investment A/c)
31.12.93 Depreciation Fund Investment A/c Dr. 1315.0
To depreciation fund A/c 1315.0
(Being profit on sale investment
transferred)
31.12.93 Depreciation fund A/c Dr. 61315.0
To lease A/c 61315.0
(Being the transfer of depreciation fund
A/c to lease A/c)
31.12.93 Lease A/c Dr. 1315.0
To PCL A/c 1315.0
(Being Balance of lease A/c transferred to
place
1.1.94 Lease A/c Dr. 70000.0
To Bank A/c 70000.0

DEPRECIATION FUND ACCOUNT

Date Particulars Rs. Date Particulars Rs.
31.12.90 By Balance c/d 13920.7 31.12.90 By Dep. a/c 13920.7
13920.7 13920.7
31.12.91 To Balance c/d 28537.4 1.1.91 By Balance b/d 13920.7
31.12.91 By Bank A/c Int. 696.0
31.12.91 By Dec. a/c 13920.4
28537.4 28537.4
31.12.92 By Balance c/d 43885.0 1.1.92 By Balance c/d 28537.4
31.12.92 By Bank A/c Int. 1426.9
31.12.92 By Dep. A/c 13920.7
43885.0 43885.0
31.12.93 To lease A/c 61315.0 1.1.93 By Balance b/d 43885.0
31.12.93 By Bank Interest 3194.3
31.12.93 By Dep. a/c 61315.0
61315.0 61315.0

LEASE ACCOUNT
Date Particulars Rs. Date Particulars Rs.
1.1.90 To Bank A/c 60000 31.12.90 By Balance c/d 60000
60000 60000
1.1.91 To Balance b/d 60000 31.12.91 By Balance c/d 60000
60000 60000
1.1.92 To Balance b/d 60000 31.12.92 By Balance c/d 60000
60000 60000
1.1.93 To Balance b/d 60000 31.12.93 By Balance c/d 60000
60000 60000
31.12.93 To P & L A/c 1315
(Profit) 61315 61315

DEPRECIATION FUND INVESTMENT A/C

Date Particulars Rs. Date Particulars Rs.
31.12.90 To Bank A/c 13920.7 31.12.90 By Balance c/d 13920.7
13920.7 13920.7
1.1.91 To Balance b/d 13920.7 31.12.91 By Balance c/d 28537.4
31.12.92 To Bank A/c 14616.7
28537.4 28537.4
1.1.92 To Balance b/d 28537.4 31.12.92 By Balance c/d 43885.0
31.12.92 To Bank A/c 15347.6
43885.0 43885.0
1.1.93 To Balance b/d 43885.0 31.12.93 By Bank a/c 45200.0
To Dep. Fund a/c 1315.0
45200.0 45200.0