On 1st april 2001 a machine was purchased for rs 200000 On 1st january 2002 second machine was purchased - Accountancy - Depreciation Provisions and Reserves

Question

On 1st april 2001 a machine was purchased for rs 200000 On 1st
january 2002 second machine was purchased for rs 240000 On 1st july
2003 first machine which was purchased in 1st april 2001 was sold
for rs 145000 On 1st october 2003 a new machine was purchased for
rs 400000 Depriciation charged is 10% p a method is written down
value method Books of the firm is closed on december 31st ​

Neha Chopra · Accepted Answer

Machinery
Account

Dr
Cr

Date
Particulars
Amount
(Rs)
Date
Particulars
Amount
(Rs)

2001

Apr 01
To Bank
A/c
2,00,000
Dec 31
By Depreciation
A/c
15,000

Dec 31
By Balance
c/d
1,85,000

2,00,000

2002

Jan 01
To Balance
b/d
1,85,000
Dec 31
By Depreciation
A/c
42,500

Jan 01
To Bank
A/c
2,40,000
Dec 31
By Balance
c/d
3,82,500

4,25,000

2003

Jan 01
To Balance
b/d
3,82,500
July
01
By Depreciation
A/c
8,325

Oct 01
To Bank
A/c
4,00,000
July
01
By Bank
A/c
1,45,000

July
01
By P/L
A/c
13,175

Dec 31
By Depreciation
A/c
31,600

Dec 31
Balance
c/d
5,84,400

7,82,500

Calculation of WDV of Machine sold on 01-July-2003
WDV of that machine on 31-12-2001 = 1,85,000
WDV of that machine on 31-12-2002 = 1,66,500
(1,85,000 - (1,85,000 × 10%)
WDV of that machine on 01-07-2003 = 1,58,175
(1,66,500 - (1,66,500 × 10% × 612))
Therefore loss on sale of machinery = WDV – Sale Price =
1,53,175 – 1,45,000 = 13,175

Calculation of Depreciation

Year
Ending
Particulars
Amount
No of months for
depreciation
Rate
Depreciation
Amount
Total Depreciation For
the Year

31-12-01
Machinery
Purchased
200000
9
10%
15000
15000

31-12-02
Machinery Op
Bal
185000
12
10%
18500

31-12-02
Machinery
Purchased
240000
12
10%
24000
42500

31-12-03
Machinery
Sold
166500
6
10%
8325
8325

31-12-03
Machinery
Purchased
400000
3
10%
10000

31-12-03
Remaining
Machinery
216000
12
10%
21600
31600

Regards

Machinery Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2001			2001
Apr 01	To Bank A/c	2,00,000	Dec 31		By Depreciation A/c	15,000
			Dec 31		By Balance c/d	1,85,000


		2,00,000				2,00,000

2002			2002
Jan 01	To Balance b/d	1,85,000	Dec 31		By Depreciation A/c	42,500
Jan 01	To Bank A/c	2,40,000	Dec 31		By Balance c/d	3,82,500


		4,25,000				4,25,000


2003			2003
Jan 01	To Balance b/d	3,82,500	July 01		By Depreciation A/c	8,325
Oct 01	To Bank A/c	4,00,000	July 01		By Bank A/c	1,45,000
			July 01		By P/L A/c	13,175
			Dec 31		By Depreciation A/c	31,600
			Dec 31		Balance c/d	5,84,400

		7,82,500				7,82,500

Year Ending	Particulars	Amount	No. of months for depreciation	Rate	Depreciation Amount	Total Depreciation For the Year
31-12-01	Machinery Purchased	200000	9	10%	15000	15000
31-12-02	Machinery Op. Bal	185000	12	10%	18500
31-12-02	Machinery Purchased	240000	12	10%	24000	42500
31-12-03	Machinery Sold	166500	6	10%	8325	8325
31-12-03	Machinery Purchased	400000	3	10%	10000
31-12-03	Remaining Machinery	216000	12	10%	21600	31600