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On April 1, 2016, Z Ltd. Purchased machinery for₹ 1,20,000 and on 30 Sept,2017, it acquired additional machinery for₹ 20,000. On 30.06.2018, a new machinery was purchased for₹ 8,000. On 30.11.2018, one of the original machine (purchased on 01.04.2016) which had cost of₹ 5,000 was found to have become obsolete and was sold as scrap for₹ 500. Depreciation is to be charged @10 % p.a on Diminishing Balance Method. Accounts are closed on 31st March each year.Show machinery account for the first three years. |
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Answer» Answer: Date Particulars Amount (Rs) Date Particulars Amount (Rs) 2005
2006
APR. 1 Bank A/c (M1) 1,20,000 Mar. 31 Depreciation A/c (M1) 18,000
Mar. 31 Balance c/d 1,02,000
1,20,000
1,20,000 2006
2007
apr. 01 Balance b/d 1,02,000 Mar. 31 Depreciation A/c
sep. 30 Bank A/c (M2) 20,000
M1 18,000
M2 (for 6 months) 1500 19,500
Mar. 31 Balance c/d
M1 84,000
M2 18,500 1,02,500
1,22,000
1,22,000 2007
2007
Apr. 01 Balance b/d
Jun. 30 Depreciation A/c (on M1 for 3 months on 3,500 ) 131.25
M1 84,000
Jun. 30 Bank A/c (SALE of M1) 500
M2 18,500 1,02,500 Jun. 30 Profit and Loss A/c (Loss on Sale) 2868.75 Jun. 30 Bank A/c (M3) 8,000 Mar. 31 Depreciation on- M1 12,075
M2 3,000
M3 900 15975
Mar. 31 Balance c/d M1 68425
M2 15500
M3 7100 91025
1,10,500
1,10,500
Note:When there is NOTHING mention in question about the which method of depriciation should be used than we will consider it straight line method of depreciationCalculation of deprecition amount and loss on sale of machine:Total cost of machine on 1st, april,2005 5000(−)Depreciation CHARGED till 30.06.2007(5000 × 15% × 2.25 years) 1631.25Value of machine on 30.06.2007 3368.75(−) sold for Rs 500 500Loss on sale of machine 2868.75 |
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