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Page No 16.53:
Question 1:
On 1st April, 2007, a limited company purchased a Machine for ₹ 1,90,000 and spent ₹ 10,000 on its installation. At the date of purchase, it was estimated that the scrap value of the machine would be ₹ 50,000 at the end of sixth year.
Give Machine Account and Depreciation A/c in the books of the Company for 4 years after providing depreciation by Fixed Installment Method. The books are closed on 31st March every year.
Answer:
| Machinery Account | ||||||
| Dr. |
Cr.
|
|||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |
| 2007 | 2008 | |||||
| Apr. 01 | Bank A/c (1,90,000 + 10,000) | 2,00,000 | Mar. 31 | Depreciation A/c | 25,000 | |
| Mar. 31 | Balance c/d | 1,75,000 | ||||
| 2,00,000 | 2,00,000 | |||||
| 2008 | 2009 | |||||
| Apr. 01 | Balance b/d | 1,75,000 | Mar. 31 | Depreciation A/c | 25,000 | |
| Mar. 31 | Balance c/d | 1,50,000 | ||||
| 1,75,000 | 1,75,000 | |||||
| 2009 | 2010 | |||||
| Apr. 01 | Balance b/d | 1,50,000 | Mar. 31 | Depreciation A/c | 25,000 | |
| Mar. 31 | Balance c/d | 1,25,000 | ||||
| 1,50,000 | 1,50,000 | |||||
| 2010 | 2011 | |||||
| Apr. 01 | Balance b/d | 1,25,000 | Mar. 31 | Depreciation A/c | 25,000 | |
| Mar. 31 | Balance c/d | 1,00,000 | ||||
| 1,25,000 | 1,25,000 | |||||
| Depreciation Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |
| 2008 | 2008 | |||||
| Mar. 31 | Machinery A/c | 25,000 | Mar. 31 | Profit and Loss A/c | 25,000 | |
| 25,000 | 25,000 | |||||
| 2009 | 2009 | |||||
| Mar. 31 | Machinery A/c | 25,000 | Mar. 31 | Profit and Loss A/c | 25,000 | |
| 25,000 | 25,000 | |||||
| 2010 | 2010 | |||||
| Mar. 31 | Machinery A/c | 25,000 | Mar. 31 | Profit and Loss A/c | 25,000 | |
| 25,000 | 25,000 | |||||
| 2011 | 2011 | |||||
| Mar. 31 | Machinery A/c | 25,000 | Mar. 31 | Profit and Loss A/c | 25,000 | |
| 25,000 | 25,000 | |||||
Working Note: Calculation of Depreciation
Page No 16.53:
Question 2:
On 1st April, 2009, a Company bought Plant and Machinery costing ₹ 68,000. It is estimated that its working life is 10 years, at the end of which it will fetch ₹ 8,000. Additions are made on 1st April, 2010 to the value of ₹ 40,000 (Residual value ₹ 4,000). More additions are made on Oct. 1, 2011 to the value of ₹ 9,800 (Break up value ₹ 800). The working life of both the additional Plant and machinery is 20 years.
Show the Plant and Machinery account for the first four years, if depreciation is written off according to Straight Line Method. The accounts are closed on 31st March every year.
Answer:
| Plant & Machinery Account | ||||||||||||
| Dr. | Cr. | |||||||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||||||
| 2009 | 2010 | |||||||||||
| Apr. 01 | Bank A/c (P1) | 68,000 | Mar. 31 | Depreciation A/c | 6,000 | |||||||
| Mar. 31 | Balance c/d | 62,000 | ||||||||||
| 68,000 | 68,000 | |||||||||||
| 2010 | 2011 | |||||||||||
| Apr. 01 | Balance b/d (P1) | 62,000 | Mar. 31 | Depreciation A/c | ||||||||
| Apr. 01 | Bank A/c (P2) | 40,000 |
P1
|
6,000 | ||||||||
|
P2
|
1,800 | 7,800 | ||||||||||
| Mar. 31 | Balance c/d | |||||||||||
|
P1
|
56,000 | |||||||||||
|
P2
|
38,200 | 94,200 | ||||||||||
| 1,02,000 | 1,02,000 | |||||||||||
| 2011 | 2012 | |||||||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||||||
|
P1
|
56,000 |
P1
|
6,000 | |||||||||
|
P2
|
38,200 | 94,200 |
P2
|
1,800 | ||||||||
| Oct. 01 | Bank A/c (P3) | 9,800 |
P3 (for 6 months)
|
225 | 8,025 | |||||||
| Mar. 31 | Balance c/d | |||||||||||
|
P1
|
50,000 | |||||||||||
|
P2
|
36,400 | |||||||||||
|
P3
|
9,575 | 95,975 | ||||||||||
| 1,04,000 | 1,04,000 | |||||||||||
| 2012 | 2013 | |||||||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||||||
|
P1
|
50,000 |
P1
|
6,000 | |||||||||
|
P2
|
36,400 |
P2
|
1,800 | |||||||||
|
P3
|
9,575 | 95,975 |
P3
|
450 | 8,250 | |||||||
| Mar. 31 | Balance c/d | |||||||||||
|
P1
|
44,000 | |||||||||||
|
P2
|
34,600 | |||||||||||
|
P3
|
9,125 | 87,725 | ||||||||||
| 95,975 | 95,975 | |||||||||||
Working Note: Calculation of Depreciation
| P1 | P2 | P3 |
|
|
|
Page No 16.53:
Question 3:
Chandra Ltd. purchased a second-hand machine for ₹ 8,000 plus CGST and SGST @ 6% each on 1st July, 2015. They spent ₹ 3,500 on its overhaul and installation.
Depreciation is written off 10% p.a. on the original cost. On 30th September, 2018, the machine was found to be unsuitable and sold for ₹ 6,500. Prepare the Machinery A/c for four years assuming that accounts are closed on 31st March.
Answer:
| Machinery Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) | |
| 2015 | 2016 | |||||
| July 01 | Bank A/c (8,000 + 3,500) | 11,500 | Mar. 31 | Depreciation A/c (for 9 months) | 863 | |
| Balance c/d | 10,637 | |||||
| 11,500 | 11,500 | |||||
| 2016 | 2017 | |||||
| Apr. 01 | Balance b/d | 10,637 | Mar. 31 | Depreciation A/c | 1,150 | |
| Balance c/d | 9,487 | |||||
| 10,637 | 10,637 | |||||
| 2017 | 2018 | |||||
| Apr. 01 | Balance b/d | 9,487 | Mar. 31 | Depreciation A/c | 1,150 | |
| Balance c/d | 8,337 | |||||
| 9,487 | 9,487 | |||||
| 2018 | 2018 | |||||
| Apr. 01 | Balance b/d | 8,337 | Sept. 30 | Depreciation A/c | 575 | |
| Bank A/c (Sale) | 6,500 | |||||
| Profit and Loss A/c (Loss on Sale) | 1,262 | |||||
| 8,337 | 8,337 | |||||
Working Note: Calculation of Profit or Loss on Sale
| Particulars | Amount (₹) |
| Value of Machinery on Apr. 01, 2018 | 8,337 |
|
Less: Depreciation for 6 months
|
575 |
| Value of Machinery on Sept. 30, 2018 | 7,762 |
|
Less: Sale Value
|
6,500 |
| Loss on Sale | 1,262 |
Page No 16.53:
Question 4:
A Ltd. purchased a machine for ₹ 5,00,000 on 1st April, 2012. Further addition were made on 1st October 2012 and on 1st July 2013 for ₹ 4,00,000 and ₹ 3,00,000 respectively. On 1st January, 2015, 1st machine was sold for ₹ 2,85,000 and new machine was purchased for ₹ 6,00,000.
Prepare Machine A/c for three years ending 31st March, 2015 if depreciation is to be charged @ 10% p.a. on straight line basis.
Answer:
|
Machinery Account |
||||||||
|
Dr. |
Cr. |
|||||||
|
Date |
Particulars |
Amount (Rs) |
Date |
Particulars |
Amount (Rs) |
|||
|
2012 |
|
|
2013 |
|
|
|||
|
Apr. 01 |
Bank A/c (M1) |
5,00,000 |
Mar. 31 |
Depreciation A/c (M1) |
50,000 |
|||
|
Oct.01 |
Bank A/c (M2) |
4,00,000 |
|
Depreciation A/c (M2) |
20,000 |
|||
|
|
|
|
Mar. 31 |
Balance c/d |
|
|||
|
|
|
|
|
M1 |
4,50,000 |
|
||
|
|
|
|
|
M2 |
3,80,000 |
8,30,000 |
||
|
|
|
9,00,000 |
|
|
9,00,000 |
|||
|
2013 |
|
|
2014 |
|
|
|||
|
Apr. 01 |
Balance b/d |
|
Mar. 31 |
Depreciation A/c |
|
|||
|
|
M1 |
4,50,000 |
|
|
M1 |
50,000 |
|
|
|
|
M2 |
3,80,000 |
8,30,000 |
|
M2 |
40,000 |
|
|
|
Jul.01 |
Bank A/c (M3) |
3,00,000 |
|
M3 |
22,500 |
1,12,500 |
||
|
|
|
|
Mar. 31 |
Balance c/d |
|
|||
|
|
|
|
|
M1 |
4,00,000 |
|
||
|
|
|
|
|
M2 |
3,40,000 |
|
||
|
|
|
|
|
M3 |
2,77,500 |
10,17,500 |
||
|
|
|
11,30,000 |
|
|
11,30,000 |
|||
|
2014 |
|
|
2015 |
|
|
|||
|
Apr. 01 |
Balance b/d |
|
Jan.01 |
Depreciation A/c (on M1 for 9 months) |
37,500 |
|||
|
|
M1 |
4,00,000 |
|
|
Bank A/c (Sale of M1) |
2,85,000 |
||
|
|
M2 |
3,40,000 |
|
|
Profit and Loss A/c (Loss on Sale) |
77,500 |
||
|
|
M3 |
2,77,500 |
10,17,500 |
Mar. 31 |
Depreciation on- |
|
||
|
2015 |
|
|
|
M2 |
40,000 |
|
||
|
Jan.01 |
Bank A/c (M4) |
6,00,000 |
|
M3 |
30,000 |
|
||
|
|
|
|
|
M4 |
15,000 |
85,000 |
||
|
|
|
|
Mar. 31 |
Balance c/d |
|
|||
|
|
|
|
|
M2 |
3,00,000 |
|
||
|
|
|
|
|
M3 |
2,47,500 |
|
||
|
|
|
|
|
M4 |
5,85,000 |
11,32,500 |
||
|
|
|
16,17,500 |
|
|
16,17,500 |
|||
|
|
|
|
|
|
|
|||
Page No 16.53:
Question 5:
On 1st January, 2006, A Ltd. Purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st July, 2006 an additional machinery costing ₹ 1,00,000 was purchased. On 1st July, 2008 the machine purchased on 1st January, 2006 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased at a cost of ₹ 2,00,000.
Show the Machinery Account for the first three calendar years after charging depreciation at 5% by the Straight Line Method.
Answer:
| Machinery Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
| 2006 | 2006 | |||||||
| Jan. 01 | Bank A/c (M1) (2,40,000 + 10,000) | 2,50,000 | Dec. 31 | Depreciation A/c | ||||
| 2011 |
M1
|
12,500 | ||||||
| July 01 | Bank A/c (M2) | 1,00,000 |
M2 (for 6 months)
|
2,500 | 15,000 | |||
| Balance c/d | ||||||||
|
M1
|
2,37,500 | |||||||
|
M2
|
97,500 | 3,35,000 | ||||||
| 3,50,000 | 3,50,000 | |||||||
| 2007 | 2007 | |||||||
| Jan. 01 | Balance b/d | Dec. 31 | Depreciation A/c | |||||
|
M1
|
2,37,500 |
M1
|
12,500 | |||||
|
M2
|
97,500 | 3,35,000 |
M2
|
5,000 | 17,500 | |||
| Balance c/d | ||||||||
|
M1
|
2,25,000 | |||||||
|
M2
|
92,500 | 3,17,500 | ||||||
| 3,35,000 | 3,35,000 | |||||||
| 2008 | 2008 | |||||||
| Jan. 01 | Balance b/d | July 01 | Depreciation A/c (M1) | 6,250 | ||||
|
M1
|
2,25,000 | Bank A/c (Sale of M1 ) | 1,43,000 | |||||
|
M2
|
92,500 | 3,17,500 | Profit and Loss A/c (Loss on Sale of M1) | 75,750 | ||||
| July 01 | Bank A/c (M3) | 2,00,000 | Dec. 31 | Depreciation A/c | ||||
|
M2
|
5,000 | |||||||
|
M3 (for 6 months)
|
5,000 | 10,000 | ||||||
| Balance c/d | ||||||||
|
M2
|
87,500 | |||||||
|
M3
|
1,95,000 | 2,82,500 | ||||||
| 5,17,500 | 5,17,500 | |||||||
Working Note: Calculation of Profit or Loss on Sale of M1
| Particulars | Amount |
| Value of Machinery on Jan. 01, 2008 | 2,25,000 |
|
Less: Depreciation for 6 months
|
6,250 |
| Value of Machinery on July 01, 2008 | 28,750 |
|
Less: Sale Value
|
1,43,000 |
| Loss on Sale | 75,750 |
Page No 16.54:
Question 6:
A company purchased on 1st April, 2009, a machinery for ₹ 80,000. On 1st October, 2010, it purchased another machine for ₹ 50,000 and on 1st October, 2011, it sold off the first machine purchased in 2009 for ₹ 23,000. Depreciation was provided on the machinery at the rate of 20% p.a. on the original cost annually.
Give the Machinery Account for four years commencing from 1st April, 2009.
Accounts are closed on 31st March every year.
Answer:
| Machinery Account | |||||||||
| Dr. | Cr. | ||||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | ||||
| 2009 | 2010 | ||||||||
| Apr. 01 | Bank A/c (M1) | 80,000 | Mar. 31 | Depreciation A/c | 16,000 | ||||
| Mar. 31 | Balance c/d | 64,000 | |||||||
| 80,000 | 80,000 | ||||||||
| 2010 | 2011 | ||||||||
| Apr. 01 | Balance b/d | 64,000 | Mar. 31 | Depreciation A/c | |||||
| Oct. 01 | Bank A/c (M2) | 50,000 |
M1
|
16,000 | |||||
|
M2 (for 6 months)
|
5,000 | 21,000 | |||||||
| Mar. 31 | Balance c/d | ||||||||
|
M1
|
48,000 | ||||||||
|
M2
|
45,000 | 93,000 | |||||||
| 1,14,000 | 1,14,000 | ||||||||
| 2011 | 2011 | ||||||||
| Apr. 01 | Balance b/d | Oct. 01 | Depreciation A/c (M1) | 8,000 | |||||
|
M1
|
48,000 | Bank A/c (Sale of M1) | 23,000 | ||||||
|
M2
|
45,000 | 93,000 | Profit and Loss A/c (Loss on Sale of M1) | 17,000 | |||||
| 2012 | |||||||||
| Mar. 31 | Depreciation A/c | 10,000 | |||||||
| Balance c/d | 35,000 | ||||||||
| 93,000 | 93,000 | ||||||||
| 2012 | 2013 | ||||||||
| Apr. 01 | Balance b/d | 35,000 | Mar. 31 | Depreciation A/c | 10,000 | ||||
| Mar. 31 | Balance c/d | 25,000 | |||||||
| 35,000 | 35,000 | ||||||||
Working Note: Calculation of Profit or Loss on Sale of M1
| Particulars | Amount |
| Value of Machinery on Apr. 01, 2011 | 48,000 |
|
Less: Depreciation for 6 months
|
8,000 |
| Value of Machinery on Oct. 01, 2011 | 40,000 |
|
Less: Sale Value
|
23,000 |
| Loss on Sale | 17,000 |
Page No 16.54:
Question 7:
Bhushan & Company purchased a Machinery on 1st April, 2009, for ₹ 54,000 and spent ₹ 6,000 on its installation. On 1st December, 2010, it purchased another machine for ₹ 30,000.
On 30th June 2011, the first machine purchased on 1st April, 2009, is sold for ₹ 36,000 and on the same date it purchased a new machinery for ₹ 80,000.
On December 1, 2012, the second machine (purchased on December 1, 2010) was also sold off for ₹ 26,000.
Depreciation was provided on machinery @ 10% p.a. on Original Cost Method annually o 31st March. Give the machinery account for four years.
Answer:
| Machinery Account | |||||||||
| Dr. | Cr. | ||||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | ||||
| 2009 | 2010 | ||||||||
| Apr. 01 | Bank A/c (M1) (54,000 + 6,000) | 60,000 | Mar. 31 | Depreciation A/c | 6,000 | ||||
| Mar. 31 | Balance c/d | 54,000 | |||||||
| 60,000 | 60,000 | ||||||||
| 2010 | 2011 | ||||||||
| Apr. 01 | Balance b/d | 54,000 | Mar. 31 | Depreciation A/c | |||||
| Dec. 01 | Bank A/c (M2) | 30,000 |
M1
|
6,000 | |||||
|
M2 (for 4 months)
|
1,000 | 7,000 | |||||||
| Mar. 31 | Balance c/d | ||||||||
|
M1
|
48,000 | ||||||||
|
M2
|
29,000 | 77,000 | |||||||
| 84,000 | 84,000 | ||||||||
| 2011 | 2011 | ||||||||
| Apr. 01 | Balance b/d | June 30 | Depreciation A/c (M1) | 1,500 | |||||
|
M1
|
48,000 | Bank A/c (Sale of M1) | 36,000 | ||||||
|
M2
|
29,000 | 77,000 | Profit and Loss A/c (Loss on Sale of M1) | 10,500 | |||||
| June 30 | Bank A/c (M3) | 80,000 | 2012 | ||||||
| Mar. 31 | Depreciation A/c | ||||||||
|
M2
|
3,000 | ||||||||
|
M3 (for 9 months)
|
6,000 | 9,000 | |||||||
| Balance c/d | |||||||||
|
M2
|
26,000 | ||||||||
|
M3
|
74,000 | 1,00,000 | |||||||
| 1,57,000 | 1,57,000 | ||||||||
| 2012 | 2012 | ||||||||
| Apr. 01 | Bank A/c | Dec. 01 | Depreciation A/c (M2) | 2,000 | |||||
|
M2
|
26,000 | Bank A/c (Sale of M2) | 26,000 | ||||||
|
M3
|
74,000 | 1,00,000 | 2013 | ||||||
| Dec. 01 | Profit and Loss A/c (Profit on sale of M2) | 2,000 | Mar. 31 | Depreciation A/c (M3) | 8,000 | ||||
| Balance c/d | 66,000 | ||||||||
| 1,02,000 | 1,02,000 | ||||||||
Working Notes:
WN1: Calculation of Profit or Loss on Sale on M1
| Particulars | Amount |
| Value of Machinery on Apr. 01, 2011 | 48,000 |
|
Less: Depreciation for 3 months
|
1,500 |
| Value of Machinery on June 30, 2011 | 46,500 |
|
Less: Sale Value
|
36,000 |
| Loss on Sale | 10,500 |
WN2: Calculation of Profit or Loss on Sale of M2
| Particulars | Amount |
| Value of Machinery on Apr. 01, 2012 | 26,000 |
|
Less: Depreciation for 8 months
|
2,000 |
| Value of Machinery on Dec. 01, 2012 | 24,000 |
|
Less: Sale Value
|
26,000 |
| Profit on Sale | 2,000 |
Page No 16.54:
Question 8:
On 1st October, 2009, Raj & Co. purchased machinery worth ₹ 40,000. On 1st October, 2011, it buys additional machinery worth ₹ 10,000. On 30th September, 2012, half of the machinery purchased on 1st Oct., 2009, is sold for ₹ 8,200. The company writes off 10 per cent p.a. on the original cost. The accounts are closed every year on 31st March.
Show the Machinery Account for four years.
Answer:
| Machinery Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
| 2009 | 2010 | |||||||
| Oct. 01 | Bank A/c | Mar. 31 | Depreciation A/c | |||||
|
M1
|
20,000 |
M1 (for 6 months)
|
1,000 | |||||
|
M2
|
20,000 | 40,000 |
M2 (for 6 months)
|
1,000 | 2,000 | |||
| Balance c/d | ||||||||
|
M1
|
19,000 | |||||||
|
M2
|
19,000 | 38,000 | ||||||
| 40,000 | 40,000 | |||||||
| 2010 | 2011 | |||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||
|
M1
|
19,000 |
M1
|
2,000 | |||||
|
M2
|
19,000 | 38,000 |
M2
|
2,000 | 4,000 | |||
| Balance c/d | ||||||||
|
M1
|
17,000 | |||||||
|
M2
|
17,000 | 34,000 | ||||||
| 38,000 | 38,000 | |||||||
| 2011 | 2012 | |||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||
|
M1
|
17,000 |
M1
|
2,000 | |||||
|
M2
|
17,000 | 34,000 |
M2
|
2,000 | ||||
| Oct. 01 | Bank A/c (M3) | 10,000 |
M3 (for 6 months)
|
500 | 4,500 | |||
| Mar. 31 | Balance c/d | |||||||
|
M1
|
15,000 | |||||||
|
M2
|
15,000 | |||||||
|
M3
|
9,500 | 39,500 | ||||||
| 44,000 | 44,000 | |||||||
| 2012 | 2012 | |||||||
| Apr. 01 | Balance b/d | Sept. 30 | Depreciation A/c (M1) | 1,000 | ||||
|
M1
|
15,000 | Bank A/c (Sale of M1) | 8,200 | |||||
|
M2
|
15,000 | Profit and Loss A/c (Loss on Sale of M1) | 5,800 | |||||
|
M3
|
9,500 | 39,500 | 2013 | |||||
| Mar.31 | Depreciation A/c | |||||||
|
M2
|
2,000 | |||||||
|
M3
|
1,000 | 3,000 | ||||||
| Balance c/d | ||||||||
|
M2
|
13,000 | |||||||
|
M3
|
8,500 | 21,500 | ||||||
| 39,500 | 39,500 | |||||||
Working Note: Calculation of Profit or Loss on Sale of M1
| Particulars | Amount |
| Value of Machinery on Apr. 01, 2012 | 15,000 |
|
Less: Depreciation for 6 months
|
1,000 |
| Value of Machinery Sept. 30, 2012 | 14,000 |
|
Less: Sale Value
|
8,200 |
| Loss on Sale | 5,800 |
Note: In order to make easy calculation machinery purchased on October 01, 2009 has been divided into two parts i.e. M1 and M2
Thus, M1 represents the first part i.e. sold for Rs 8,200
M2 represents the second part, which remains in the business
Page No 16.54:
Question 9:
On 1st April, 2010, Plant and Machinery was purchased for ₹ 1,20,000. New machinery was purchased on 1st Oct., 2010, for ₹ 50,000 and on 1st July, 2011, for ₹ 25,000.
On 1st January, 2013, a machinery of the original value of ₹ 20,000 which was included in the machinery purchased on 1st April, 2010, was sold for ₹ 6,000. Prepare Plant & Machinery A/c for three years after providing depreciation at 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year.
Answer:
| Plant & Machinery Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
| 2010 | 2011 | |||||||
| Apr. 01 | Bank A/c | Mar. 31 | Depreciation A/c | |||||
|
M1
|
20,000 |
M1
|
2,000 | |||||
|
M2
|
1,00,000 | 1,20,000 |
M2
|
10,000 | ||||
| Oct. 01 | Bank A/c (M3) | 50,000 |
M3 (for 6 months)
|
2,500 | 14,500 | |||
| Mar. 31 | Balance c/d | |||||||
|
M1
|
18,000 | |||||||
|
M2
|
90,000 | |||||||
|
M3
|
47,500 | 1,55,500 | ||||||
| 1,70,000 | 1,70,000 | |||||||
| 2011 | 2012 | |||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||
|
M1
|
18,000 |
M1
|
2,000 | |||||
|
M2
|
90,000 |
M2
|
10,000 | |||||
|
M3
|
47,500 | 1,55,500 |
M3
|
5,000 | ||||
| July 01 | Bank A/c (M4) | 25,000 |
M4 (for 9 months)
|
1,875 | 18,875 | |||
| Mar. 31 | Balance c/d | |||||||
|
M1
|
16,000 | |||||||
|
M2
|
80,000 | |||||||
|
M3
|
42,500 | |||||||
|
M4
|
23,125 | 1,61,625 | ||||||
| 1,80,500 | 1,80,500 | |||||||
| 2012 | 2013 | |||||||
| Apr.01 | Balance b/d | Jan. 01 | Depreciation A/c (M1) | 1,500 | ||||
|
M1
|
16,000 | Bank A/c (Sale of M1) | 6,000 | |||||
|
M2
|
80,000 | Profit and Loss A/c (Loss on Sale of M1) | 8,500 | |||||
|
M3
|
42,500 | Mar. 31 | Depreciation A/c | |||||
|
M4
|
23,125 | 1,61,625 |
M2
|
10,000 | ||||
|
M3
|
5,000 | |||||||
|
M4
|
2,500 | 17,500 | ||||||
| Mar. 31 | Balance c/d | |||||||
|
M2
|
70,000 | |||||||
|
M3
|
37,500 | |||||||
|
M4
|
20,625 | 1,28,125 | ||||||
| 1,61,625 | 1,61,625 | |||||||
Working Note: Calculation of Profit or Loss on Sale of M1
| Particulars | Amount |
| Value of Machinery on Apr. 01, 2012 | 16,000 |
|
Less: Depreciation for 9 months
|
1,500 |
| Value of Machinery on Jan.01, 2013 | 14,500 |
|
Less: Sale Value
|
6,000 |
| Loss on Sale | 8,500 |
Note: In order to make easy calculation plant and machinery purchased on April 01, 2010 has been divided into two parts i.e. M1 and M2.
Thus, M1: Rs 20,000 (sold for Rs 6,000)
Page No 16.55:
Question 10:
From the following transactions of a concern, prepare Machinery Account for the year ending 31st March, 2013 :-
| 2012 | ||
| April 1 | : | Purchased a second-hand machinery for ₹ 40,000. |
| April 1 | : | Spent ₹ 10,000 on repairs for making it serviceable. |
| Sept. 30 | : | Purchased additional new machinery for ₹ 20,000. |
| Dec. 31 | : | Repairs and renewals of machinery ₹ 2,000. |
| 2013 | ||
| March 31 | : | Depreciate the machinery at 10% p.a. |
Answer:
| Machinery Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
| 2012 | 2013 | |||||||
| Apr. 01 | Bank A/c (M1) (40,000 + 10,000) | 50,000 | Mar. 31 | Depreciation A/c | ||||
| Sept.30 | Bank A/c (M2) | 20,000 |
M1
|
5,000 | ||||
|
M2 (for 6 months)
|
1,000 | 6,000 | ||||||
| Balance c/d | ||||||||
|
M1
|
45,000 | |||||||
|
M2
|
19,000 | 64,000 | ||||||
| 70,000 | 70,000 | |||||||
Note: Repair charges of Rs 2,000 are categorised under revenue expenditure because these are incurred on December 31, 2012 but machinery has been purchased on September 30, 2012.
Page No 16.55:
Question 11:
A plant is purchased for ₹ 60,000 on 1st April, 2009. It is estimated that the residual value of this plant at the end of its working life of 10 years will be ₹ 20,920. Depreciation is to be provided at 10% p.a. on diminishing balance method.
You are required to show the Plant Account for 4 years, assuming that the books are closed on 31st March every year.
Answer:
| Plant Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |
| 2009 | 2010 | |||||
| Apr. 01 | Bank A/c | 60,000 | Mar. 31 | Depreciation A/c | 6,000 | |
| Mar. 31 | Balance c/d | 54,000 | ||||
| 60,000 | 60,000 | |||||
| 2010 | 2011 | |||||
| Apr. 01 | Balance b/d | 54,000 | Mar. 31 | Depreciation A/c | 5,400 | |
| Mar. 31 | Balance c/d | 48,600 | ||||
| 54,000 | 54,000 | |||||
| 2011 | 2012 | |||||
| Apr. 01 | Balance b/d | 48,600 | Mar. 31 | Depreciation A/c | 4,860 | |
| Mar. 31 | Balance c/d | 43,740 | ||||
| 48,600 | 48,600 | |||||
| 2012 | 2013 | |||||
| Apr. 01 | Balance b/d | 43,740 | Mar. 31 | Depreciation A/c | 4,374 | |
| Mar. 31 | Balance c/d | 39,366 | ||||
| 43,740 | 43,740 | |||||
Note: When deprecation is charged as per written down value method, scrap value of asset is ignored.
Page No 16.55:
Question 12:
On 1st July, 2005, Geeta Paper Limited purchased a Plant for ₹ 1,50,000 and paid ₹ 10,000 as freight on its carriage. Depreciation was provided at 10% p.a. on the Written Down Value Method on this plant. On 1st Oct., 2008, this plant was sold for ₹ 80,000.
Prepare Plant A/c for 4 years, assuming that the books are closed on 31st March every year.
Answer:
| Plant Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |
| 2005 | 2006 | |||||
| July 01 | Bank A/c (1,50,000 + 10,000) | 1,60,000 | Mar. 31 | Depreciation A/c (for 9 months) | 12,000 | |
| Balance c/d | 1,48,000 | |||||
| 1,60,000 | 1,60,000 | |||||
| 2006 | 2007 | |||||
| Apr. 01 | Balance b/d | 1,48,000 | Mar. 31 | Depreciation A/c | 14,800 | |
| Mar. 31 | Balance c/d | 1,33,200 | ||||
| 1,48,000 | 1,48,000 | |||||
| 2007 | 2008 | |||||
| Apr. 01 | Balance b/d | 1,33,200 | Mar. 31 | Depreciation A/c | 13,320 | |
| Mar. 31 | Balance c/d | 1,19,880 | ||||
| 1,33,200 | 1,33,200 | |||||
| 2008 | 2008 | |||||
| Apr. 01 | Balance b/d | 1,19,880 | Oct. 01 | Depreciation A/c | 5,994 | |
| Bank A/c (Sale) | 80,000 | |||||
| Profit and Loss A/c (Loss on Sale) | 33,886 | |||||
| 1,19,880 | 1,19,880 | |||||
Working Note: Calculation of Profit or Loss on Sale
| Particulars | Amount |
| Value of Plant on Apr. 01, 2008 | 1,19,880 |
|
Less: Depreciation for 6 months
|
5,994 |
| Value of Plant on Oct. 01, 2008 | 1,13,886 |
|
Less: Sale Value
|
80,000 |
| Loss on Sale | 33,886 |
Page No 16.55:
Question 13:
A Company purchased a second-hand machine on 1st April, 2016, for ₹ 30,000 and immediately spent ₹ 4,000 on its repair and ₹ 1,000 on its installation. On Oct. 1, 2018, the machine was sold for ₹ 25,000. Prepare Machine Account after charging depreciation @ 10% p.a. by diminishing balance method, assuming that the books are closed on 31st March every year. IGST was charged @ 12% on purchase and sale of machine.
Answer:
| Machinery Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) | |
| 2016 | 2017 | |||||
| Apr. 01 | Bank A/c (30,000 +4,000 + 1,000) | 35,000 | Mar. 31 | Depreciation A/c | 3,500 | |
| Balance c/d | 31,500 | |||||
| 35,000 | 35,000 | |||||
| 2017 | 2018 | |||||
| Apr. 01 | Balance b/d | 31,500 | Mar. 31 | Depreciation A/c | 3,150 | |
| Mar. 31 | Balance c/d | 28,350 | ||||
| 31,500 | 31,500 | |||||
| 2018 | 2018 | |||||
| Apr. 01 | Balance b/d | 28,350 | Oct. 01 | Depreciation A/c | 1,418 | |
| Bank A/c (Sale) | 25,000 | |||||
| Profit and Loss A/c (Loss on Sale) | 1,932 | |||||
| 28,350 | 28,350 | |||||
Working Note: Calculation of Profit or Loss on Sale
| Particulars | Amount (₹) |
| Value of Machinery on Apr. 01, 2018 | 28,350 |
|
Less: Depreciation for 6 months
|
1,418 |
| Value of Machinery on Oct. 01, 2018 | 26,932 |
|
Less: Sale Value
|
25,000 |
| Loss on Sale | 1,932 |
Page No 16.55:
Question 14:
A firm purchased on 1st April, 2009, a second-hand Machinery for ₹ 36,000 and spent ₹ 4,000 on its installation. On 1st Oct. in the same year another Machinery costing ₹ 20,000 was purchased. On 1st Oct., 2011, the Machinery bought on 1st April, 2009 was sold off for ₹ 12,000 and on the same date a fresh Machine was purchased for ₹ 64,000. Depreciation is provided annually on 31st March, @ 10% p.a. on the Written Down Value Method. Show the Machine A/c from 1st April, 2009 to 31st March, 2013.
Answer:
| Machinery Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
| 2009 | 2010 | |||||||
| Apr. 01 | Bank A/c (M1) (36,000 + 4,000) | 40,000 | Mar. 31 | Depreciation A/c | ||||
| Oct. 01 | Bank A/c (M2) | 20,000 |
M1
|
4,000 | ||||
|
M2 (for 6 months)
|
1,000 | 5,000 | ||||||
| Mar. 31 | Balance c/d | |||||||
|
M1
|
36,000 | |||||||
|
M2
|
19,000 | 55,000 | ||||||
| 60,000 | 60,000 | |||||||
| 2010 | 2011 | |||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||
|
M1
|
36,000 |
M1
|
3,600 | |||||
|
M2
|
19,000 | 55,000 |
M2
|
1,900 | 5,500 | |||
| Mar. 31 | Balance c/d | |||||||
|
M1
|
32,400 | |||||||
|
M2
|
17,100 | 49,500 | ||||||
| 55,000 | 55,000 | |||||||
| 2011 | 2011 | |||||||
| Apr. 01 | Balance b/d | Oct. 01 | Depreciation A/c (M1) | 1,620 | ||||
|
M1
|
32,400 | Bank A/c (Sale of M1) | 12,000 | |||||
|
M2
|
17,100 | 49,500 | Profit and Loss A/c (Loss on Sale of M1) | 18,780 | ||||
| Oct. 01 | Bank A/c (M3) | 64,000 | 2012 | |||||
| Mar. 31 | Depreciation A/c | |||||||
|
M2
|
1,710 | |||||||
|
M3 (for 6 months)
|
3,200 | 4,910 | ||||||
| Mar. 31 | Balance c/d | |||||||
|
M2
|
15,390 | |||||||
|
M3
|
60,800 | 76,190 | ||||||
| 1,13,500 | 1,13,500 | |||||||
| 2012 | 2013 | |||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||
|
M2
|
15,390 |
M2
|
1,539 | |||||
|
M3
|
60,800 | 76,190 |
M3
|
6,080 | 7,619 | |||
| Mar. 31 | Balance c/d | |||||||
|
M2
|
13,851 | |||||||
|
M3
|
54,720 | 68,571 | ||||||
| 76,190 | 76,190 | |||||||
Working Note: Calculation of Profit or Loss on Sale
| Particulars | Amount |
| Value of Machinery on Apr. 01, 2011 | 32,400 |
|
Less: Depreciation for 6 months
|
1,620 |
| Value of Machinery on Oct. 01, 2011 | 30,780 |
|
Less: Sale Value
|
12,000 |
| Loss on Sale | 18,780 |
Page No 16.56:
Question 15(A):
State four main causes of providing depreciation.
Answer:
The four main causes of depreciation are as follows.
1. Constant use: Due to constant use of the fixed assets there exists normal wear and tear that leads to fall in the value of fixed assets.
2. Expiry of time: With the passage of time, whether assets are used or not, its effective life decreases. The natural forces like rain, weather, etc. lead to deterioration of the fixed assets.
3. Obsolescence: Due to the fast technological innovations and inventions today’s assets may be outdated by tomorrow’s sophisticated assets. This leads to the obsolescence of fixed assets.
4. Expiry of legal rights: If an asset is acquired for a specific period of time, then, whether the asset is put to use or not, its value becomes zero at the end of its useful life.
Page No 16.56:
Question 15(B):
A Company purchased a machinery for ₹ 50,000 on 1st Oct., 2007. Another machinery costing ₹ 10,000 was purchased on 1st Dec., 2008. On 31st March, 2010, the machinery purchased in 2007 was sold at a loss of ₹ 5,000. The Company charges depreciation at the rate of 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year.
Prepare Machinery account for 3 years.
Answer:
| Machinery Account | ||||||||
| Dr. | Cr. | |||||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
| 2007 | 2008 | |||||||
| Oct. 01 | Bank A/c (M1) | 50,000 | Mar. 31 | Depreciation A/c (for 6 months) | 3,750 | |||
| Mar. 31 | Balance c/d | 46,250 | ||||||
| 50,000 | 50,000 | |||||||
| 2008 | 2009 | |||||||
| Apr. 01 | Balance b/d | 46,250 | Mar. 31 | Depreciation A/c | ||||
| Dec. 01 | Bank A/c (M2) | 10,000 |
M1
|
6,938 | ||||
|
M2 (for 4 months)
|
500 | 7,438 | ||||||