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#### Page No 13.43:

 Book of Shri Ram Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2010 2011 April 01 Bank 40,000 Mar.31 Depreciation 4,000 April 01 Bank (Erection Expense) 5,000 Balance c/d 41,000 45,000 45,000 2011 2012 April 01 Balance b/d 41,000 Mar.31 Depreciation 4,000 Balance c/d 37,000 41,000 41,000 2012 2013 April 01 Balance b/d 37,000 Mar.31 Depreciation 4,000 Balance c/d 33,000 37,000 37,000

Calculation of Depreciation:

#### Page No 13.44:

 Furniture Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2005 2005 Jan.01 Bank (F1) 55,000 Dec.31 Depreciation (F1) 5,000 Dec.31 Balance c/d (F1) 50,000 55,000 55,000 2006 2006 Jan.01 Balance b/d (F1) 50,000 Dec.31 Depreciation Jan.01 Bank (F2) 9,500 F1 5,000 F2 900 5,900 Dec.31 Balance c/d F1 45,000 F2 8,600 53,600 59,500 59,500 2007 2007 Jan.01 Balance b/d Dec.31 Depreciation F1 45,000 F1 5,000 F2 8,600 53,600 F2 900 5,900 Dec.31 Balance c/d F1 40,000 F2 7,700 47,700 53,600 53,600 2008 2008 Jan.01 Balance b/d Dec.31 Depreciation F1 40,000 F1 5,000 F2 7,700 47,700 F2 900 July 01 Bank (F3) 8,400 F3 400 6,300 Dec.31 Balance c/d F1 35,000 F2 6,800 F3 8,000 49,800 56,100 56,100

Working Notes:

#### Page No 13.44:

In this question, the word 'p.a.' is not suffixed with the rate of depreciation.

There are two ways of doing such a question.

1) Where the date of purchase is taken into consideration, so in this case, depreciation will be charged for six months. (less commonly followed practice)

2) Where the date of purchase of the asset is ignored and depreciation is charged for complete one year. (Most commonly followed practice)

The first way is given below:

 Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2006 2006 Jan.01 Bank (M1) 2,50,000 Dec.31 Depreciation July 01 Bank (M2) 1,00,000 M1 12,500 M2 (6 Months) 2,500 15,000 Dec.31 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 M1 2,37,500 M1 12,500 M2 97,500 3,35,000 M2 5,000 17,500 Dec.31 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 (for 6 months) 6,250 M1 2,25,000 July 01 Bank (M1 sold) 1,43,000 M2 92,500 3,17,500 July 01 Profit and Loss (loss on sale) 75,750 July 01 Bank (M3) 2,00,000 Dec.31 Depreciation M2 5,000 M3(for 6 months) 5,000 10,000 Dec.31 Balance c/d M2 87,500 M3 1,95,000 2,82,500 5,17,500 5,17,500 2009 2009 Jan.01 Balance b/d Dec.31 Depreciation M2 87,500 M2 5,000 M3 1,95,000 2,82,500 M3 10,000 15,000 Dec.31 Balance c/d M2 82,500 M3 1,85,000 2,67,500 2,82,500 2,82,500

Working Notes:

1. Calculation of Deprecation

2. Calculation of profit or loss on sale of Machine 1

 Particulars Amount (Rs) Book Value on Jan 01, 2008 2,25,000 Less: Deprecation for six month (6,250) Book Value on July 01, 2008 2,18,750 Less: Sale Proceeds (1,43,000) Loss on Sale of Machine 75,750

The second way of answering this question is:

 Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2006 2006 Jan.01 Bank (M1) 2,50,000 Dec.31 Depreciation July 01 Bank (M2) 1,00,000 M1 12,500 M2 (6 Months) 5,000 17,500 Dec.31 Balance c/d M1 2,37,500 M2 95,000 3,32,500 3,50,000 3,50,000 2007 2007 Jan.01 Balance b/d Dec.31 Depreciation M1 2,37,500 M1 12,500 M2 95,000 3,32,500 M2 5,000 17,500 Dec.31 Balance c/d M1 2,25,000 M2 90,000 3,15,000 3,32,500 3,32,500 2008 2008 Jan.01 Balance b/d July 01 Depreciation (for 6 months) 6,250 M1 2,25,000 July 01 Bank (M1 sold) 1,43,000 M2 90,000 3,15,000 July 01 Profit and Loss (loss on sale) 75,750 July 01 Bank (M3) 2,00,000 Dec.31 Depreciation M2 5,000 M3 10,000 15,000 Dec.31 Balance c/d M2 85,000 M3 1,90,000 2,75,000 5,15,000 5,15,000 2009 2009 Jan.01 Balance b/d Dec.31 Depreciation M2 85,000 M2 5,000 M3 1,90,000 2,75,000 M3 10,000 15,000 Dec.31 Balance c/d M2 80,000 M3 1,80,000 2,60,000 2,75,000 2,75,000

Working Notes:

1. Calculation of Deprecation

2. Calculation of profit or loss on sale of Machine 1

 Particulars Amount (Rs) Book Value on Jan 01, 2008 2,25,000 Less: Deprecation for six month (6,250) Book Value on July 01, 2008 2,18,750 Less: Sale Proceeds (1,43,000) Loss on Sale of Machine 75,750

Note: The answer obtained by following the second way is different from the one given in the textbook. However, it is advisable that students should follow the second method (i.e. charging depreciation for complete one year in case 'p.a.' word is not given with the rate of depreciation).

#### Page No 13.44:

 Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particular J.F. Amount (Rs) 2010 2010 Jan.01 Bank (M1) 50,000 Dec.31 Depreciation June 30 Bank (M2) 20,000 M1 5,000 M2 (6 months) 1,000 6,000 Dec.31 Balance c/d M1 45,000 M2 (6 months) 19,000 64,000 70,000 70,000

Note:

Repair and renewal made on September 30, 2010 will not be recorded in Machinery Account because, this repair was made after putting the Machinery in to use.

#### Page No 13.44:

 Asset Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 1999 2000 April 01 Bank 10,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 9,500 10,500 10,500 2000 2001 April 01 Balance b/d 9,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 8,500 9,500 9,500 2001 2002 April 01 Balance b/d 8,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 7,500 8,500 8,500 2002 2003 April 01 Balance b/d 7,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 6,500 7,500 7,500 2003 2004 April 01 Balance b/d 6,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 5,500 6,500 6,500 2004 2005 April 01 Balance b/d 5,500 Mar.31 Depreciation 1,000 Mar.31 Balance c/d 4,500 5,500 5,500 2005 2006 April 01 Balance b/d 4,500 Mar.31 Depreciation 1,000 Mar.31 Bank 600 Mar.31 Profit and Loss (Loss) 2,900 4,500 4,500

(i) Depreciation Expense for the year ended March 31, 2000 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2004 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2006 is Rs 2,900

#### Page No 13.44:

 Maruti Van Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2000 2000 Jan.01 Bank (I) 65,000 Dec.31 Depreciation (I) 6,500 Dec.31 Balance c/d (I) 58,500 65,000 65,000 2001 2001 Jan.01 Balance b/d (I) 58,500 Dec.31 Depreciation July 01 Bank (II) 70,000 (I) 6,500 (II) (for 6 month) 3,500 10,000 Dec.31 Balance c/d (I) 52,000 (II) 66,500 1,18,500 1,28,500 1,28,500 2002 2002 Jan.01 Balance b/d Jan.01 Bank (I) 45,000 (I) 52,000 Jan.01 Profit and Loss (Loss on Sale) 7,000 (II) 66,500 1,18,500 Dec.31 Depreciation Jan.01 Bank (III) 1,70,000 (II) 7,000 (III) 17,000 24,000 Dec.31 Balance c/d (II) 59,500 (III) 1,53,000 2,12,500 2,88,500 2,88,500

Working Notes

1. Calculation of annual Depreciation

2. Calculation of profit or loss on Sale of Maruti Van (I)

 Particulars Amount (Rs) Book Value on Jan 01, 2002 52,000 Less: sale of Maruti Van (45,000) Loss on sale of Maruti Van 7,000

#### Page No 13.44:

 Books of Modern Ltd. Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2003 2003 May 01 Bank (M1) 60,000 Dec.31 Depreciation M1 (for 8 months) 8,000 Dec.31 Balance c/d 52,000 60,000 60,000 2004 2004 Jan.01 Balance b/d 52,000 Dec.31 Depreciation July 01 Bank (M2) 20,000 M1 12,000 M2 (6 months) 2,000 14,000 Dec.31 Balance c/d M1 40,000 M2 18,000 58,000 72,000 72,000 2005 2005 Jan.01 Balance b/d Mar.31 Depreciation (M1) (for 3 months) 3,000 M1 40,000 Mar.31 Bank (M1) 38,500 M2 18,000 58,000 Dec.31 Depreciation (M2) 4,000 Mar.31 Profit and Loss (profit) 1,500 Dec.31 Balance c/d 14,000 59,500 59,500

Working Notes

1. Calculation of annual Depreciation

 Particulars Amount (Rs) Value on Jan 01, 2005 40,000 Depreciation for 3 Months (3,000) Value on March 31, 2005 37,000 Less: Sale of Machine (38,500) Profit on sale of Machine 1 1,500

#### Page No 13.45:

 Books of Sohan Lal & Sons Plant Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2010 2010 April 01 Bank (I) 60,000 Dec.31 Depreciation (I) for 9 months 4,500 (II) for 3 months 1,000 5,500 Oct.01 Bank (II) 40,000 Dec.31 Balance c/d (I) 55,500 (II) 39,000 94,500 1,00,000 1,00,000 2011 2011 Jan.01 Balance b/d Dec.31 Depreciation (I) 55,500 (I) 6,000 (II) 39,000 94,500 (II) 4,000 July 01 Bank (III) 20,000 (III) for 6 months 1,000 11,000 Dec.31 Balance c/d (I) 49,500 (II) 35,000 (III) 19,000 1,03,500 1,14,500 1,14,500 2012 2012 Jan.01 Balance b/d Jan.01 Bank 6,000 (I) 49,500 Jan.01 Profit and Loss (loss)(16,500 – 6,000) 10,500 (II) 35,000 Dec.31 Depreciation (III) 19,000 1,03,500 (I) 4,000 (II) 4,000 (III) 2,000 10,000 Dec.31 Balance c/d (I) 29,000 (II) 31,000 (III) 17,000 77,000 1,03,500 1,03,500

Working Notes

1. Calculation of Depreciation

2. Calculation of profit or loss on Sale of Plant I

 Particulars Amount (Rs) 1/3rd of Book Value of Plant I as on Jan.01, 2012( 49,500 × 1/3) 16,500 Less: Sale of Plant (6,000) Loss on Sale of Plant 10,500

#### Page No 13.45:

 Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2003 2003 April 01 Bank (I) 30,000 Dec.31 Depreciation Oct.01 Bank (II) 20,000 I (for 9 months) 2,250 II 500 2,750 Dec.31 Balanced c/d I 27,750 II 19,500 47,250 50,000 50,000 2004 2004 Jan.01 Balance b/d Dec.31 Depreciation I 27,750 I 3,000 II 19,500 47,250 II 2,000 III 500 5,500 July 01 Bank (III) 10,000 Dec.31 Balance c/d I 24,750 II 17,500 III 9,500 51,750 57,250 57,250 2005 2005 Jan.01 Balance b/d Jan.01 Bank I(1/3rd portion) 3,000 I 24,750 Jan.01 Profit and Loss (Loss on Sale of I) 5,250 II 17,500 Dec.31 Depreciation III 9,500 51,750 I (on 2/3rd portion) 2,000 II 2,000 III 1,000 5,000 Dec.31 Balance c/d I (on 2/3rd portion) 14,500 II 15,500 III 8,500 38,500 51,750 51,750

Working Notes

1. Calculation of Depreciation

Calculation of profit or loss on sale of 1/3rd Portion of Machine I

 Particulars Amount (Rs) Book Value of 1/3rd portion of Machine I on Jan 01, 2005(24,750 × 1/3) 8,250 Less: Sale Value (3,000) Loss on sale 5,250