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.
Amount (Rs Amount (Rs
Date Particulars Date Particulars
) )
2007 2008
Apr. Bank A/c (1,90,000 + 2,00,000 Mar. 31 Depreciatio 25,000
01 10,000) n A/c
Mar. 31 Balance c/d 1,75,000
2,00,000 2,00,000
2008 2009
Apr. Balance b/d 1,75,000 Mar. 31 Depreciatio 25,000
01 n A/c
Mar. 31 Balance c/d 1,50,000
1,75,000 1,75,000
2009 2010
Apr. Balance b/d 1,50,000 Mar. 31 Depreciatio 25,000
01 n A/c
Mar. 31 Balance c/d 1,25,000
1,50,000 1,50,000
2010 2011
Apr. Balance b/d 1,25,000 Mar. 31 Depreciatio 25,000
01 n A/c
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. Machinery A/c 25,000 Mar. Profit and Loss A/c 25,000
31 31
25,000 25,000
2009 2009
Mar. Machinery A/c 25,000 Mar. Profit and Loss A/c 25,000
31 31
25,000 25,000
2010 2010
Mar. Machinery A/c 25,000 Mar. Profit and Loss A/c 25,000
31 31
25,000 25,000
2011 2011
Mar. Machinery A/c 25,000 Mar. Profit and Loss A/c 25,000
31 31
25,000 25,000

Working Note: Calculation of Depreciation

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. Bank A/c 68,000 Mar. Depreciation A/c 6,000
01 (P1) 31
Mar. Balance c/d 62,000
31
68,000 68,000
2010 2011
Apr. Balance b/d 62,000 Mar. Depreciation A/c
01 (P1) 31
Apr. Bank A/c 40,000 P1 6,000
01 (P2)
P2 1,800 7,800
Mar. Balance c/d
31
P1 56,000
P2 38,200 94,200
1,02,000 1,02,000
2011 2012
Apr. Balance b/d Mar. Depreciation A/c
01 31
P1 56,000 P1 6,000
P2 38,200 94,200 P2 1,800
Oct. Bank A/c 9,800 P3 (for 6 months) 225 8,025
01 (P3)
Mar. Balance c/d
 31
P1 50,000
P2 36,400
P3 9,575 95,975
1,04,000 1,04,000
2012 2013
Apr. Balance b/d Mar. Depreciation A/c
01 31
P1 50,000 P1 6,000
P2 36,400 P2 1,800
P3 9,575 95,975 P3 450 8,250
Mar. Balance c/d
31
P1 44,000
P2 34,600
P3 9,125 87,725
95,975 95,975

Working Note: Calculation of Depreciation

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.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2013
Apr. Bank A/c (M1) 5,00,000 Mar. Depreciation A/c 50,000
01 31 (M1)
Oct.01 Bank A/c (M2) 4,00,000 Depreciation A/c 20,000
(M2)
Mar. Balance c/d
31
M1 4,50,00
0
M2 3,80,00 8,30,000
0

9,00,000 9,00,000
2013 2014
Apr. Balance b/d Mar. Depreciation A/c
01 31
M1 4,50,00 M1 50,000
0
M2 3,80,00 8,30,000 M2 40,000
0
Jul.01 Bank A/c (M3) 3,00,000 M3 22,500 1,12,500
Mar. Balance c/d
31
M1 4,00,00
0
M2 3,40,00
0
M3 2,77,50 10,17,50
0 0
11,30,00 11,30,00
0 0
2014 2015
Apr. Balance b/d Jan.0 Depreciation A/c (on 37,500
01 1 M1 for 9 months)
M1 4,00,00 Bank A/c (Sale of 2,85,000
0 M1)
 M2 3,40,00 Profit and Loss A/c 77,500
0 (Loss on Sale)
M3 2,77,50 10,17,50 Mar. Depreciation on-
0 0 31
2015 M2 40,000
Jan.01 Bank A/c (M4) 6,00,000 M3 30,000
M4 15,000 85,000
Mar. Balance c/d
31
M2 3,00,00
0
M3 2,47,50
0
M4 5,85,00 11,32,50
0 0
16,17,50 16,17,50
0 0

Working Note: Calculation of Profit or Loss on Sale of M1

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.
Amo Amo
Da
Particulars unt ( Date Particulars unt (
te
Rs) Rs)
20 2006
06
Ja Bank A/c (M1) 2,50, Dec. Depreciation A/c
n. (2,40,000 + 10,000) 000 31
01
20 M1 12,500
11
Jul Bank A/c (M2) 1,00, M2 (for 6 months) 2,500 15,00
y 000 0
01
Balance c/d
M1 2,37,500
M2 97,500 3,35,
000
3,50, 3,50,
000 000
20 2007
07
Ja Balance b/d Dec. Depreciation A/c
n. 31
01
M1 2,37,5 M1 12,500
00
M2 97,500 3,35, M2 5,000 17,50
000 0
Balance c/d
M1 2,25,000
M2 92,500 3,17,
500
3,35, 3,35,
000 000
20 2008
08
Ja Balance b/d July Depreciation A/c 6,250
n. 01 (M1)
01
M1 2,25,0 Bank A/c (Sale of 1,43,
00 M1 ) 000
M2 92,500 3,17, Profit and Loss A/c 75,75
 500 (Loss on Sale of 0
M1)
Jul Bank A/c (M3) 2,00, Dec. Depreciation A/c
y 000 31
01
M2 5,000
M3 (for 6 months) 5,000 10,00
0
Balance c/d
M2 87,500
M3 1,95,000 2,82,
500
5,17, 5,17,
500 500

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

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.
Amount (Rs Amount (Rs
Date Particulars Date Particulars
) )
2009 2010
Apr. Bank A/c (M1) 80,000 Mar. Depreciation 16,000
01 31 A/c
Mar. Balance c/d 64,000
31
80,000 80,000
2010 2011
Apr. Balance b/d 64,000 Mar. Depreciation
01 31 A/c
Oct. Bank A/c (M2) 50,000 M1 16,00
01 0
M2 5,000 21,000
(for 6
months
)
Mar. Balance c/d
31
M1 48,00
0
M2 45,00 93,000
0
1,14,000 1,14,000
2011 2011
Apr. Balance b/d Oct. 01 Depreciation 8,000
01 A/c (M1)
M1 48,000 Bank A/c (Sale 23,000
of M1)
M2 45,000 93,000 Profit and Loss 17,000
A/c (Loss on
Sale of M1)
2012
Mar. Depreciation 10,000
31 A/c
Balance c/d 35,000
93,000 93,000
2012 2013
Apr. Balance b/d 35,000 Mar. Depreciation 10,000
01 31 A/c
Mar. Balance c/d 25,000
 31
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

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.
Amoun Amoun
Date Particulars Date Particulars
t (Rs) t (Rs)
2009 2010
Apr. Bank A/c (M1) (54,000 + 60,000 Mar. Depreciation A/c 6,000
01 6,000) 31
Mar. Balance c/d 54,000
31
60,000 60,000
2010 2011
Apr. Balance b/d 54,000 Mar. Depreciation A/c
01 31
Dec. Bank A/c (M2) 30,000 M1 6,0
01 00
M2 (for 4 months) 1,0 7,000
00
Mar. Balance c/d
31
M1 48,
000
M2 29, 77,000
000
84,000 84,000
2011 2011
Apr. Balance b/d June Depreciation A/c (M1) 1,500
01 30
M1 48, Bank A/c (Sale of M1) 36,000
000
M2 29, 77,000 Profit and Loss A/c (Loss on 10,500
000 Sale of M1)
June Bank A/c (M3) 80,000 2012
30
Mar. Depreciation A/c
31
M2 3,00
0
M3 (for 9 months) 6,00 9,000
0
Balance c/d
M2 26,0
00
M3 74,0 1,00,00
00 0
1,57,00 1,57,00
0 0
2012 2012
Apr. Bank A/c Dec. Depreciation A/c (M2) 2,000
01 01
M2 26, Bank A/c (Sale of M2) 26,000
000
M3 74, 1,00,00 2013
000 0
Dec. Profit and Loss A/c (Profit 2,000 Mar. Depreciation A/c (M3) 8,000
01 on sale of M2) 31
Balance c/d 66,000
 1,02,00 1,02,00
0 0

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
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.
Da Amou Amou
Particulars Date Particulars
te nt (Rs) nt (Rs)
20 2010
09
Oct Bank A/c Mar. Depreciation A/c
. 31
01
M1 20, M1 (for 6 months) 1,0
00 00
0
M2 20, 40,000 M2 (for 6 months) 1,0 2,000
00 00
0
Balance c/d
M1 19,
00
0
M2 19, 38,000
00
0
40,000 40,000
20 2011
10
Ap Balance b/d Mar. Depreciation A/c
r. 31
01
M1 19, M1 2,0
00 00
0
 M2 19, 38,000 M2 2,0 4,000
00 00
0
Balance c/d
M1 17,
00
0
M2 17, 34,000
00
0
38,000 38,000
20 2012
11
Ap Balance b/d Mar. Depreciation A/c
r. 31
01
M1 17, M1 2,0
00 00
0
M2 17, 34,000 M2 2,0
00 00
0
Oct Bank A/c (M3) 10,000 M3 (for 6 months) 50 4,500
. 0
01
Mar. Balance c/d
31
M1 15,
00
0
M2 15,
00
0
M3 9,5 39,500
00
44,000 44,000
20 2012
12
Ap Balance b/d Sept. Depreciation A/c (M1) 1,000
r. 30
01
M1 15, Bank A/c (Sale of M1) 8,200
00
0
M2 15, Profit and Loss A/c (Loss on 5,800
00 Sale of M1)
 0
M3 9,5 39,500 2013
00
Mar. Depreciation A/c
31
M2 2,0
00
M3 1,0 3,000
00
Balance c/d
M2 13,
00
0
M3 8,5 21,500
00
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

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.
Amou Amou
Da
Particulars nt (Rs Date Particulars nt (Rs
te
) )
20 2011
10
Ap Bank Mar. Depreciation A/c
r. A/c 31
01
M1 20, M1 2,0
000 00
M2 1,0 1,20,0 M2 10,
0,0 00 00
00 0
Oc Bank A/c (M3) 50,00 M3 (for 6 months) 2,5 14,50
t. 0 00 0
01
Mar. Balance c/d
31
M1 18,
00
0
M2 90,
00
0
M3 47, 1,55,5
50 00
0
1,70,0 1,70,0
 00 00
20 2012
11
Ap Balance b/d Mar. Depreciation A/c
r. 31
01
M1 18, M1 2,0
000 00
M2 90, M2 10,
000 00
0
M3 47, 1,55,5 M3 5,0
500 00 00
Jul Bank A/c (M4) 25,00 M4 (for 9 months) 1,8 18,87
y 0 75 5
01
Mar. Balance c/d
31
M1 16,
00
0
M2 80,
00
0
M3 42,
50
0
M4 23, 1,61,6
12 25
5
1,80,5 1,80,5
00 00
20 2013
12
Ap Balance b/d Jan. 01 Depreciation A/c (M1) 1,500
r.0
1
M1 16, Bank A/c (Sale of M1) 6,000
000
M2 80, Profit and Loss A/c (Loss on 8,500
000 Sale of M1)
M3 42, Mar. Depreciation A/c
500 31
M4 23, 1,61,6 M2 10,
125 25 00
0
 M3 5,0
00
M4 2,5 17,50
00 0
Mar. Balance c/d
31
M2 70,
00
0
M3 37,
50
0
M4 20, 1,28,1
62 25
5
1,61,6 1,61,6
25 25

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)

M2: Rs 1,00,000 (remains in the business)

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.
Dat Amoun Amoun
Particulars Date Particulars
e t (Rs) t (Rs)
201 2013
2
Apr. Bank A/c (M1) 50,000 Mar. Depreciation A/c
01 (40,000 + 10,000) 31
Sept Bank A/c (M2) 20,000 M1 5,0
.30 00
M2 (for 6 months) 1,0 6,000
00
Balance c/d
M1 45,000
M2 19,000 64,000
70,000 70,000

Note: Repair charges of Rs 2,000 are categorized under revenue expenditure

because these are incurred on December 31, 2012 but machinery has been
purchased on September 30, 2012.
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. Bank A/c 60,000 Mar. Depreciation A/c 6,000
01 31
Mar. Balance c/d 54,000
31
60,000 60,000
2010 2011
Apr. Balance b/d 54,000 Mar. Depreciation A/c 5,400
01 31
Mar. Balance c/d 48,600
31
54,000 54,000
2011 2012
Apr. Balance b/d 48,600 Mar. Depreciation A/c 4,860
01 31
Mar. Balance c/d 43,740
31
48,600 48,600
2012 2013
Apr. Balance b/d 43,740 Mar. Depreciation A/c 4,374
01 31
Mar. Balance c/d 39,366
31
43,740 43,740

Note: When deprecation is charged as per written down value method, scrap
value of asset is ignored.
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.
Da Amount Dat Amount
Particulars Particulars
te (Rs) e (Rs)
20 200
05 6
Jul Bank A/c (1,50,000 + 1,60,000 Ma Depreciation A/c (for 9 months) 12,000
y 10,000) r.
01 31
Balance c/d 1,48,000
1,60,000 1,60,000
20 200
06 7
Ap Balance b/d 1,48,000 Ma Depreciation A/c 14,800
r. r.
01 31
Ma Balance c/d 1,33,200
r.
31
1,48,000 1,48,000
20 200
07 8
Ap Balance b/d 1,33,200 Ma Depreciation A/c 13,320
r. r.
01 31
Ma Balance c/d 1,19,880
r.
31
1,33,200 1,33,200
20 200
08 8
Ap Balance b/d 1,19,880 Oct Depreciation A/c 5,994
r. . 01
01
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

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.
Amoun Dat Amoun
Date Particulars Particulars
t (Rs) e t (Rs)
2009 201
0
Apr. Bank A/c (M1) (36,000 + 40,000 Ma Depreciation A/c
01 4,000) r.
31
Oct. Bank A/c (M2) 20,000 M1 4,00
01 0
M2 (for 6 months) 1,00 5,000
0
Ma Balance c/d
r.
31
M1 36,0
00
M2 19,0 55,000
00
60,000 60,000
2010 201
1
Apr. Balance b/d Ma Depreciation A/c
01 r.
31
M1 36, M1 3,60
000 0
M2 19, 55,000 M2 1,90 5,500
000 0
Ma Balance c/d
r.
31
M1 32,4
00
M2 17,1 49,500
00
55,000 55,000
2011 201
1
Apr. Balance b/d Oct Depreciation A/c (M1) 1,620
01 . 01
M1 32, Bank A/c (Sale of M1) 12,000
400
M2 17, 49,500 Profit and Loss A/c (Loss on 18,780
100 Sale of M1)
Oct. Bank A/c (M3) 64,000 201
01 2
Ma Depreciation A/c
r.
31
M2 1,71
 0
M3 (for 6 months) 3,20 4,910
0
Ma Balance c/d
r.
31
M2 15,3
90
M3 60,8 76,190
00
1,13,50 1,13,50
0 0
2012 201
3
Apr. Balance b/d Ma Depreciation A/c
01 r.
31
M2 15, M2 1,53
390 9
M3 60, 76,190 M3 6,08 7,619
800 0
Ma Balance c/d
r.
31
M2 13,8
51
M3 54,7 68,571
20
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
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.
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.
D
Amoun Amoun
at Particulars Date Particulars
t (Rs) t (Rs)
e
20 2008
07
Oc Bank A/c (M1) 50,000 Mar. 31 Depreciation A/c (for 6 3,750
t. months)
01
Mar. 31 Balance c/d 46,250
50,000 50,000
20 2009
08
A Balance b/d 46,250 Mar. 31 Depreciation A/c
pr.
01
De Bank A/c (M2) 10,000 M1 6,9
c. 38
01
M2 (for 4 months) 500 7,438
Mar. 31 Balance c/d
M1 39,
312
M2 9,5 48,812
00
56,250 56,250
20 2010
09
A Balance b/d Mar. 31 Depreciation A/c 5,897
pr.
01
M1 39,3 Bank A/c (Sale of M1) 28,415
12
M2 9,50 48,812 Profit and Loss A/c (Loss on 5,000
0 Sale of M1)
Mar. 31 Depreciation A/c (M2) 1,425
Mar. 31 Balance c/d 8,075
48,812 48,812

Working Note: Calculation of Sale Price of M1

Particulars Amount
Value of Machinery on Apr. 01, 2009 39,312
Less: Depreciation for 12 months 5,897
Value of Machinery on Mar. 31, 2010 33,415
Less: Loss on Sale (given) 5,000
Sale Value (Balancing Figure) 28,415

Question 16:

Ashoka Ltd. bought a machine on 1st April, 2010 for ₹ 2,40,000 and spent
₹ 4,000 on its carriage and ₹ 6,000 towards installation cost. On 1st July,
2011 it purchased a second hand machinery for ₹ 75,000 and spent ₹
25,000 on its overhauling.

On 1st January, 2013 it decided to sell the machinery bought on 1st April,
2010 at a loss of ₹ 20,000. It bought another machine on the same date for
₹ 40,000. Company decided to charge depreciation @ 15% p.a. on written
down value method. Prepare machinery account for 3 years. Books are
closed each year on 31st March.
ANSWER:
Machinery Account
Dr. Cr.
Da Amount Amount
Particulars Date Particulars
te (Rs) (Rs)
20 2011
10
Ap Bank A/c (M1) 2,50,000 Mar. 31 Depreciation A/c 37,500
r. (2,40,000
01 + 4,000 + 6,000)
Mar. 31 Balance c/d 2,12,500
2,50,000 2,50,000
20 2012
11
Ap Balance b/d 2,12,500 Mar. 31 Depreciation A/c
r.
01
Jul Bank A/c (M2) 1,00,000 M1 31,875
y (75,000+25,000)
01
M2 (for 9 months) 11,250 43,125
Mar. 31 Balance c/d
M1 1,80,62
5
M2 88,750 2,69,375
3,12,500 3,12,500
20 2013
12
Ap Balance b/d Jan. 01 Depreciation A/c (M1) 20,320
r.
01
M1 1,80, Bank A/c (Sale of M1) 1,40,305
625
M2 88,75 2,69,375 Profit and Loss A/c (Loss on 20,000
0 Sale of M1)
20 Mar. 31 Depreciation A/c
13
Ja Bank A/c (M3) 40,000 M2 13,3
n. 12
01
M3 (for 3 months) 1,50 14,813
0
Mar. 31 Balance c/d
M2 75,4
38
 M3 38,5 1,13,938
00
3,09,375 3,09,375

Working Note: Calculation of Sale Price of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 1,80,625
Less: Depreciation for 9 months 20,320
Value of Machinery on Jan. 01, 2013 1,60,305
Less: Loss on Sale (given) 20,000
Sale Value (Balancing Figure) 1,40,305

Question 17:

The Sameer Transport Company purchased 10 Trucks at ₹ 90,000 each

on 1st April 2011. On 1st October 2013 one of the Trucks was involved in
an accident and is completely destroyed. ₹ 56,200 was received from the
Insurance company in full settlement. On the same date another truck was
purchased by the company for the sum of ₹ 1,00,000. The company writes
off 20% per annum on the Diminishing Balance Method. The company
maintains the calendar year as its financial year. Show the Truck Account
for four years ending 31st December, 2014.
ANSWER:
Truck Account
Dr. Cr.
D Amou Amou
Da
at Particulars nt (Rs Particulars nt (Rs
te
e ) )
2 20
0 11
1
1
A Bank A/c De Depreciation A/c
pr c.
. 31
0
1
T1 90, T1 (for 9 months) 13,
000 500
T2 8,1 9,00,0 T2 (for 9 months) 1,2 1,35,0
0,0 00 1,5 00
00 00
De Balance c/d
c.
31
T1 76,
500
T2 6,8 7,65,0
8,5 00
00
9,00,0 9,00,0
00 00
2 20
0 12
1
2
Ja Balance b/d De Depreciation A/c
n. c.
0 31
1
T1 76, T1 15,
500 300
T2 6,8 7,65,0 T2 1,3 1,53,0
8,5 00 7,7 00
00 00
De Balance c/d
c.
31
T1 61,
200
T2 5,5 6,12,0
0,8 00
00
7,65,0 7,65,0
00 00
2 20
0 13
1
3
Ja Balance b/d Oc Depreciation A/c (T1) 9,180
n. t.
0 01
1
T1 61, Oc Bank A/c (Sale of T1) 56,20
200 t. 0
01
T2 5,5 6,12,0 De Depreciation A/c
0,8 00 c.
00 31
O Profit and Loss A/c (Profit 4,180 T2 1,1
ct. on Sale of T1) 0,1
0 60
1
O Bank A/c (T3) 1,00,0 T3 (for 6 months) 5,0 1,15,1
ct. 00 00 60
0
1
De Balance c/d
c.
31
T2 4,4
0,6
40
T3 95, 5,35,6
000 40
7,16,1 7,16,1
80 80
2 20
0 14
1
4
Ja Balance b/d De Depreciation A/c
n. c.
0 31
1
T2 4,4 T2 88,
0,6 128
40
T3 95, 5,35,6 T3 19, 1,07,1
000 40 000 28
De Balance c/d
c.
31
T2 3,5
2,5
12
T3 76, 4,28,5
 000 12
5,35,6 5,35,6
40 40

Working Note: Calculation of Profit & Loss on Sale of T1

Particulars Amount
Value of Truck on Jan. 01, 2013 61,200
Less: Depreciation for 9 months 9,180
Value of Truck on Oct. 01, 2013 52,020
Less: Sale Value 56,200
Profit on Sale 4,180

Note: In order to make easy calculation, Truck purchased on April 01, 2011 has been divided
into two parts i.e. T1 and T2.

Thus, T1: Rs 90,000 (sold for Rs 56,200)

T2: Rs 8,10,000 (includes the cost of 9 trucks)

Question 18:

Raja Textiles Co. which closes its books on 31st March, purchased a
machine on 1-4-2009 for ₹ 50,000. On 1-10-2010, it purchased an
additional machine for ₹ 30,000. The part of the machine which was
purchased on 1-4-2009 costing ₹ 10,000 was sold for ₹ 3,600 on 30th
Sept., 2012. Prepare the Machine Account for four years, if the
depreciation is provided at the rate of 10% p.a. on Diminishing Balance
Method.
ANSWER:
Machinery Account
Dr. Cr.
Da Amou Da Amou
Particulars Particulars
te nt (Rs) te nt (Rs)
20 201
09 0
Ap Bank Ma Depreciation A/c
r. A/c r.
01 31
M1 10, M1 1,000
00
0
M2 40, 50,000 M2 4,000 5,000
00
0
Ma Balance c/d
r.
31
M1 9,000
M2 36,000 45,000
50,000 50,000
20 201
10 1
Ap Balance b/d Ma Depreciation A/c
r. r.
01 31
M1 9,0 M1 900
00
M2 36, 45,000 M2 3,600
00
0
Oct Bank A/c (M3) 30,000 M3 (for 6 months) 1,500 6,000
.
01
Ma Balance c/d
r.
31
M1 8,100
M2 32,400
M3 28,500 69,000
75,000 75,000
20 201
11 2
Ap Balance b/d Ma Depreciation A/c
r. r.
01 31
M1 8,1 M1 810
00
M2 32, M2 3,240
40
0
 M3 28, 69,000 M3 2,850 6,900
50
0
Ma Balance c/d
r.
31
M1 7,290
M2 29,160
M3 25,650 62,100
69,000 69,000
20 201
12 2
Ap Balance b/d Sep Depreciation A/c (M1) 365
r. t.
01 30
M1 7,2 Sep Bank A/c (sale of M1) 3,600
90 t.
30
M2 29, Sep Profit and Loss A/c (Loss on 3,325
16 t. Sale of M1)
0 30
M3 25, 62,100 201
65 3
0
Ma Depreciation A/c
r.
31
M2 2,916
M3 2,565 5,481
Ma Balance c/d
r.
31
M2 26,244
M3 23,085 49,329
62,100 62,100

Working Note: Calculation of Profit & Loss Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 7,290
Less: Depreciation for 6 months 365
Value of Machinery on Sept.30, 2012 6,925
Less: Sale Value 3,600
Loss on Sale 3,325
Note: In order to make easy calculation, machinery purchased on April 01,
2009 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 10,000 (sold for Rs 3,600)

M2: Rs 40,000

Question 19:

A Company, which closes its books on 31st March every year, purchased
on 1st July, 2010, machinery costing ₹ 30,000. It purchased further
machinery on 1st January, 2011, costing ₹ 20,000 and on 1st October,
2011, costing ₹ 10,000. On 1st April, 2012, one-third of the machinery
installed on 1st July, 2010, became obsolete and was sold for ₹ 3,000.
Show how the machinery account would appear in the books of the
Company, it being given that machinery was depreciated by Diminishing
Balance Method at 10% per annum. What would be the balance of
Machinery Account on 1st April, 2013?
ANSWER:
Machinery Account
Dr. Cr.
D
Amou Da Amou
at Particulars Particulars
nt (Rs) te nt (Rs)
e
20 201
10 1
Ju Bank Ma Depreciation A/c
ly A/c r.
01 31
M1 10,000 M1 (for 9 months) 750
M2 20,000 30,000 M2 (for 9 months) 1,5
00
20 M3 (for 3 months) 500 2,750
11
Ja Bank A/c (M3) 20,000 Ma Balance c/d
n. r.
01 31
M1 9,2
50
M2 18,
500
M3 19, 47,250
500
50,000 50,000
20 201
11 2
A Balance b/d Ma Depreciation A/c
pr. r.
01 31
M1 9,250 M1 925
M2 18,500 M2 1,8
50
M3 19,500 47,250 M3 1,9
50
O Bank A/c (M4) 10,000 M4 (for 6 months) 500 5,225
ct.
01
Ma Balance c/d
r.
31
M1 8,3
25
M2 16,
650
M3 17,
550
M4 9,5 52,025
00
57,250 57,250
20 201
12 2
A Balance b/d Ap Bank A/c (Sale of M1) 3,000
pr. r.
01 01
M1 8,325 Profit and Loss A/c (Loss on 5,325
Sale of M1)
M2 16,650 201
3
M3 17,550 Ma Depreciation A/c
r.
31
 M4 9,500 52,025 M2 1,6
65
M3 1,7
55
M4 950 4,370
Ma Balance c/d
r.
31
M2 14,
985
M3 15,
795
M4 8,5 39,330
50
52,025 52,025

Working Note: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 8,325
Less: Sale Value 3,000
Loss on Sale 5,325

Note: In order to make easy calculation, machinery purchased on July 01,

2010 has been divided into two parts i.e. M1 and M2.

Thus, M1: 1/3rd value i.e Rs 10,000 (sold for Rs 3,000)

M2: 2/3rd value i.e. Rs Rs 40,000 (remained in the business)

Question 20:

On July 1, 2005 Pushpak Ltd. purchased a machinery for ₹ 5,70,000 and

paid ₹ 30,000 for its overhauling and installation. Depreciation is provided
@ 20% p.a. on Original Cost Method and the books are closed on 31st
March every year. The machine was sold on 31st January 2008 for a sum
of ₹ 1,60,000. You are required to show the Machinery Account and
Provision for Depreciation Account for three years.
ANSWER:
Machinery Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2005 2006
July Bank A/c (5,70,000 + 6,00,000 Mar. Balance c/d 6,00,000
01 30,000) 31
6,00,000 6,00,000
2006 2007
Apr. Balance b/d 6,00,000 Mar. Balance c/d 6,00,000
01 31
6,00,000 6,00,000
2007 2008
Apr. Balance b/d 6,00,000 Jan. Provision for 3,10,000
01 31 Depreciation A/c
Bank A/c (Sale) 1,60,000
Profit and Loss A/c (Loss 1,30,000
on Sale)
6,00,000 6,00,000

Provision for Depreciation Account

Dr. Cr.
Amount
Date Particulars Date Particulars Amount (Rs)
(Rs)
2006 2006
Mar. Balance c/d 90,000 Mar. Depreciation A/c (for 90,000
31 31 9 months)
90,000 90,000
2007 2006
Mar. Balance c/d 2,10,000 Apr. Balance b/d 90,000
31 01
2007
 Mar. Depreciation A/c 1,20,000
31
2,10,000 2,10,000
2008 2007
Jan. Machinery A/c 3,10,000 Apr. Balance b/d 2,10,000
31 01
2008
Jan. Depreciation A/c (for 1,00,000
31 10 months)
3,10,000 3,10,000

Working Note: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on July 01, 2005 6,00,000
Less: Depreciation for 9 Months 90,000
Value of Machinery on Apr. 01, 2006 5,10,000
Less: Depreciation 1,20,000
Value of Machinery on Apr. 01, 2007 3,90,000
Less: Depreciation for 10 Months 1,00,000
Value of Machinery on Jan. 31, 2008 2,90,000
Less: Sale Value 1,60,000
Loss on Sale 1,30,000

Question 21:

A machine as purchased on 1st October 2012 at a cost of ₹ 3,00,000 and

₹ 20,000 were spent on its installation. The depreciation is written off at
10% p.a. on the Diminishing Value Method. The books are closed on 31st
March every year. The machine was sold for ₹ 1,30,000 on 1st July 2015.
Show the Machinery Account and Provision for Depreciation Account for all
the years.
 ANSWER:
Machinery Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2012 2013
Oct. Bank A/c (3,00,000 + 3,20,000 Mar. 31 Balance c/d 3,20,000
01 20,000)
3,20,000 3,20,000
2013 2014
Apr. Balance b/d 3,20,000 Mar. 31 Balance c/d 3,20,000
01
3,20,000 3,20,000
2014 2015
Apr. Balance b/d 3,20,000 Mar. 31 Balance c/d 3,20,000
01
3,20,000 3,20,000
2015 2015
Apr. Balance b/d 3,20,000 July 01 Provision for Depreciation 79,916
01 A/c
Bank A/c (Sale ) 1,30,000
Profit and Loss A/c (Loss on 1,10,084
Sale)
3,20,000 3,20,000
 Provision for Depreciation Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2013 2013
Mar. Balance c/d 16,000 Mar. 31 Depreciation A/c (for 6 16,000
31 months)
16,000 16,000
2014 2013
Mar. Balance c/d 46,400 Apr. 01 Balance b/d 16,000
31
2014
Mar. 31 Depreciation A/c 30,400
46,400 46,400
2015 2014
Mar. Balance c/d 73,760 Apr. 01 Balance b/d 46,400
31
2015
Mar. 31 Depreciation A/c 27,360
73,760 73,760
2015 2015
July Machinery A/c 79,916 Apr. 01 Balance b/d 73,760
01
July 01 Depreciation A/c (for 3 6,156
months)
79,916 79,916

Working Note: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on Oct. 01, 2012 3,20,000
Less: Depreciation for 6 Months 16,000
Value of Machinery on Apr. 01, 2013 3,04,000
Less: Depreciation 30,400
Value of Machinery on Apr. 01, 2014 2,73,600
Less: Depreciation 27,360
Value of Machinery on Apr. 01, 2015 2,46,240
Less: Depreciation for 3 Months 6,156
Value of Machinery on July 01, 2015 2,40,084
Less: Sale Value 1,30,000
Loss on Sale 1,10,084
Question 22:

On 1st April 2008, a Company purchased 6 machines for ₹ 50,000 each.

Depreciation at the rate of 10% p.a. is charged on Straight Line Method.
The accounting year of the Company ends on 31st March and the
depreciation is credited to a separate 'Provision for Depreciation Account'.
On 1st October, 2010, one machine was sold for ₹ 30,000 and on 1st April,
2011 a second machine was sold for ₹ 24,000.
You are required to prepare Machinery Account and Provision for
Depreciation Account for four years ending 31st March, 2012.
ANSWER:
Machinery Account
Dr. Cr.
Da Amount Dat Amount
Particulars Particulars
te (Rs) e (Rs)
20 200
08 9
Ap Bank Mar Balance c/d
r. A/c . 31
01
M1 50,00 M1 50,00
0 0
M2 50,00 M2 50,00
0 0
M3 2,00, 3,00,000 M3 2,00, 3,00,000
000 000
3,00,000 3,00,000
20 201
09 0
Ap Balance b/d Mar Balance c/d
r. . 31
01
M1 50,00 M1 50,00
0 0
M2 50,00 M2 50,00
0 0
M3 2,00, 3,00,000 M3 2,00, 3,00,000
000 000
3,00,000 3,00,000
20 201
10 0
Ap Balance b/d Oct. Provision for Depreciation A/c 12,500
r. 01
01
M1 50,00 Bank A/c (Sale of M1) 30,000
0
M2 50,00 Profit and Loss A/c (Loss on Sale of 7,500
0 M1)
M3 2,00, 3,00,000 201
000 1
Mar Balance c/d
. 31
M2 50,00
0
M3 2,00, 2,50,000
000
3,00,000 3,00,000
20 201
11 1
Ap Balance b/d Apr. Provision for Depreciation A/c 15,000
r. 01
01
M2 50,00 Bank A/c (Sale of M2) 24,000
0
M3 2,00, 2,50,000 Profit and Loss A/c (Loss on Sale of 11,000
000 M2)
201
2
Mar Balance c/d (M3) 2,00,000
. 31
2,50,000 2,50,000

Provision for Depreciation Account

Dr. Cr.
Da Amoun Amoun
Particulars Date Particulars
te t (Rs) t (Rs)
20 2009
09
M Balance c/d 30,000 Mar. Depreciation A/c
ar. 31
31
M1 5,000
M2 5,000
M3 20,00 30,000
0
 30,000 30,000
20 2009
10
M Balance c/d 60,000 Apr. Balance b/d 30,000
ar. 01
31
2010
Mar. Depreciation A/c
31
M1 5,000
M2 5,000
M3 20,00 30,000
0
60,000 60,000
20 2010
10
Oc Machinery A/c (M1) 12,500 Apr. Balance b/d 60,000
t. (5,000 + 5,000 + 2,500) 01
01
20 Oct.01 Depreciation A/c (M1) 2,500
11
M Balance c/d 75,000 2011
ar.
31
Mar. Depreciation A/c
31
M2 5,0
00
M3 20, 25,000
000
87,500 87,500
20 2011
11
Ap Machinery A/c (M2) 15,000 Apr. Balance b/d 75,000
r. (5,000 + 5,000 + 5,000) 01
01
20 2012
12
M Balance c/d 80,000 Mar. Depreciation A/c (M3) 20,000
ar. 31
31
95,000 95,000

Working Notes:
WN1: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2008 50,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2009 45,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2010 40,000
Less: Depreciation for 6 months 2,500
Value of Machinery on Oct. 01, 2010 37,500
Less: Sale Value 30,000
Loss on Sale 7,500

WN2: Calculation of Profit & Loss on Sale of M2

Particulars Amount
Value of Machinery on Apr. 01, 2008 50,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2009 45,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2010 40,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2011 35,000
Less: Sale Value 24,000
Loss on Sale 11,000

Note: For making calculation easy, Machinery purchased on April 01, 2008
has been divided into three i.e. M1, M2 and M3.

Thus, M1: Rs 50,000 (sold for Rs 30,000 on Oct. 01, 2010)

M2: Rs 50,000 (sold for Rs 24,000 on Apr. 01, 2011)
M3: Rs 2,00,000 (includes the cost of 4 machines)

Page No 15.59:

Question 23:

On 1st July 2016, ABC Ltd. purchase 4 machines for ₹ 80,000 each. The
accounting year of the company ends on 31st March every year.
Depreciation is provided at the rate of 15% p.a. on original cost.
On 1st April, 2008 one machine was sold for ₹ 50,000 and on 1st January,
2010 a second machine was sold for ₹ 40,000. Another machine with a
higher capacity which cost ₹ 2,00,000 was purchased on 1st January,
2010.
You are required to show: (i) Machinery Account, (ii) Depreciation Account,
and (iii) Provision for Depreciation Account for four years ending 31st
March, 2010.
ANSWER:
Machinery Account
Dr. Cr.
D D
Amou Amou
at Particulars at Particulars
nt (Rs) nt (Rs)
e e
20 20
06 07
Ju Bank A/c M Balance c/d
ly ar.
01 31
M1 80,0 M1 80,0
00 00
M2 80,0 M2 80,0
00 00
M3 1,60 3,20,00 M3 1,60 3,20,00
,000 0 ,000 0
3,20,00 3,20,00
0 0
20 20
07 08
A Balance b/d M Balance c/d
pr. ar.
01 31
M1 80,0 M1 80,0
00 00
M2 80,0 M2 80,0
00 00
M3 1,60 3,20,00 M3 1,60 3,20,00
,000 0 ,000 0
3,20,00 3,20,00
0 0
20 20
08 08
A Balance b/d A Provision for Depreciation A/c 21,000
pr. pr.
01 01
M1 80,0 A Bank A/c (Sale of M1 ) 50,000
00 pr.
01
M2 80,0 A Profit and Loss A/c (Loss on 9,000
00 pr. Sale of M1)
01
M3 1,60 3,20,00 20
,000 0 09
M Balance c/d
ar.
31
M2 80,0
00
M3 1,60 2,40,00
,000 0
3,20,00 3,20,00
0 0
20 20
09 10
A Balance b/d Ja Provision for Depreciation A/c 42,000
pr. n.
01 01
M2 80,0 Ja Bank A/c (Sale of M2) 40,000
00 n.
01
M3 1,60 2,40,00 M Balance c/d
,000 0 ar.
31
20 M3 1,60
10 ,000
Ja Profit and Loss A/c (Profit on 2,000 M4 2,00 3,60,00
n. Sale of M2) ,000 0
01
Ja Bank A/c (M4) 2,00,00
n. 0
01
4,42,00 4,42,00
0 0

Depreciation Account
Dr. Cr.
 Amount ( Amount (
Date Particulars Date Particulars
Rs) Rs)
2007 2007
Mar. Provision for 36,000 Mar.3 Profit & Loss A/c 36,000
31 Depreciation A/c 1
36,000 36,000
2008 2008
Mar. Provision for 48,000 Mar.3 Profit & Loss A/c 48,000
31 Depreciation A/c 1
48,000 48,000
2009 2009
Mar. Provision for 36,000 Mar.3 Profit & Loss A/c 36,000
31 Depreciation A/c 1
36,000 36,000
2010 2010
Mar. Provision for 40,500 Mar.3 Profit & Loss A/c (31,500 40,500
31 Depreciation A/c 1 + 9,000)
40,500 40,500

Provision for Depreciation Account

Dr. Cr.
Dat Amount (R Amount (
Particulars Date Particulars
e s) Rs)
200 2007
7
Mar. Balance c/d 36,000 Mar. Depreciation A/c
31 31
M1 (for 9 9,000
months)
M2 (for 9 9,000
months)
M3 (for 9 18,00 36,000
months) 0
36,000 36,000
200 2007
8
Mar. Balance c/d 84,000 Apr. Balance b/d 36,000
31 01
2008
Mar. Depreciation A/c
31
M1 12,00
0
M2 12,00
 0
M3 24,00 48,000
0
84,000 84,000
200 2008
8
Apr. Machinery A/c (9,000 + 21,000 Apr. Balance b/d 84,000
01 12,000) 01
200 2009
9
Mar. Balance c/d 99,000 Mar. Depreciation A/c
31 31
M2 12,00
0
M3 24,00 36,000
0
1,20,000 1,20,000
201 2009
0
Jan. Machinery A/c (9,000 + 42,000 Apr. Balance b/d 99,000
01 12,000 + 12,000 + 01
9,000)
Mar. Balance c/d 97,500 2010
31
Jan. Depreciation A/c 9,000
01 (M2)
Mar. Depreciation A/c
31
M3 24,00
0
M4 (for 3 7,500 31,500
months)
1,39,500 1,39,500

Working Notes:

WN1: Calculation of Profit & Loss on Sale M1

Particulars Amount
Value of Machinery on July 01, 2006 80,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Apr. 01, 2007 71,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2008 59,000
Less: Sale Value 50,000
Loss on Sale 9,000

WN2: Calculation of Profit & Loss on Sale of M2

Particulars Amount
Value of Machinery on July 01, 2006 80,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Apr. 01, 2007 71,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2008 59,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2009 47,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Jan. 01, 2010 38,000
Less: Sale Value 40,000
Profit on Sale 2,000

Note: In order to make easy calculation, machinery purchased on July 01,

2006 has been divided into three parts i.e. M1, M2 and M3.

Thus, M1: Rs 80,000 (sold for Rs 50,000 on Apr. 01, 2008)

M2: Rs 80,000 (sold for Rs 40,000 on Jan. 01, 2010)
M3: Rs 1,60,000 (includes the cost of 2 machines)

Page No 15.59:

Question 24:

X Ltd. which closes its books of account every year on 31st March,
purchased on 1st October, 2011 machinery costing ₹ 4,40,000. It
purchased further machinery on 1st April, 2012 costing ₹ 5,20,000. On
30th June, 2013, the first machine was sold for ₹ 2,50,000 and on the
same date a fresh machine was installed at a cost of ₹ 3,00,000. On 1st
July 2014, the second machine purchased on 1st April 2012 was also sold
for ₹ 3,25,000.
The company writes off depreciation at 10% p.a. on the Straight Line
Method each year. Show the Machinery A/c, Depreciation A/c and
Provision for Depreciation A/c for all the four years.
ANSWER:
Machinery Account
Dr.
Date Particulars Amount (Rs) Date
2011 2012
Oct. Bank A/c (M1) 4,40,000 Mar. 31 Balance c/d
01
4,40,000
2012 2013
Apr. Balance b/d 4,40,000 Mar. 31 Balance c/d
01
Apr. Bank A/c (M2) 5,20,000 M1
01
M2
9,60,000
2013 2013
Apr. Balance b/d June 30 Provision for Dep
01
M1 4,40,000 Bank A/c (Sale o
M2 5,20,000 9,60,000 Profit and Loss A
June Bank A/c (M3) 3,00,000 2014
30
Mar. 31 Balance c/d
M2
M3
12,60,000
2014 2014
Apr. Balance b/d July 01 Provision for Dep
01
M2 5,20,000 Bank A/c (Sale o
M3 3,00,000 8,20,000 Profit and Loss A
2015
Mar. 31 Balance c/d (M3)
8,20,000

Depreciation Account
Dr. Cr.
Dat Amount Amount
Particulars Date Particulars
e (Rs) (Rs)
201 2012
2
Ma Provision for 22,000 Mar. Profit & Loss A/c 22,000
r. Depreciation A/c 31
31
22,000 22,000
201 2013
3
Ma Provision for 96,000 Mar. Profit & Loss A/c 96,000
r. Depreciation A/c 31
31
96,000 96,000
201 2014
4
Ma Provision for 85,500 Mar. Profit & Loss A/c 85,500
r. Depreciation A/c 31 (74,500 + 11,000)
31
85,500 85,500
201 2015
5
Ma Provision for 43,000 Mar. Profit & Loss A/c 43,000
r. Depreciation A/c 31 (30,000 + 13,000)
31
43,000 43,000

Provision for Depreciation Account

Dr. Cr.
Da Amount Da Amount
Particulars Particulars
te (Rs) te (Rs)
20 20
12 12
M Balance c/d (M1) 22,000 M Depreciation A/c (M1) 22,000
ar. ar. (for 6 months)
31 31
22,000 22,000
20 20
13 12
M Balance c/d 1,18,000 Ap Balance b/d 22,000
ar. r.
31 01
20
13
M Depreciation A/c
ar.
 31
M1 44,000
M2 52,000 96,000
1,18,000 1,18,000
20 20
13 13
Ju Machinery A/c (M1) 77,000 Ap Balance b/d 1,18,000
ne (22,000 + 44,000 + 11,000) r.
30 01
20 Ju Depreciation A/c (M1) 11,000
14 ne (for 3 months)
30
M Balance c/d 1,26,500 20
ar. 14
31
M Depreciation A/c
ar.
31
M2 52,000
M3 (for 9 months) 22,500 74,500
2,03,500 2,03,500
20 20
14 14
Jul Machinery A/c (M2) 1,17,000 Ap Balance b/d 1,26,500
y (52,000 + 52,000 + 13,000) r.
01 01
20 Jul Depreciation A/c (M2) 13,000
15 y (for 3 months)
01
M Balance c/d (M3) 52,500 20
ar. 15
31
M Depreciation A/c (M3) 30,000
ar.
31
1,69,500 1,69,500

Working Notes:

WN1: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Oct. 01, 2011 4,40,000
Less: Depreciation for 6 months 22,000
Value of Machinery on Apr. 01, 2012 4,18,000
Less: Depreciation 44,000
Value of Machinery on Apr. 01, 2013 3,74,000
Less: Depreciation for 3 months 11,000
Value of Machinery on June 30, 2013 3,63,000
Less: Sale Value 2,50,000
Loss on Sale 1,13,000

WN2: Calculation of Profit & Loss on Sale of M2

Particulars Amount
Value of Machinery on Apr. 01, 2012 5,20,000
Less: Depreciation 52,000
Value of Machinery on Apr. 01, 2013 4,68,000
Less: Depreciation 52,000
Value of Machinery on Apr. 01, 2014 4,16,000
Less: Depreciation for 3 months 13,000
Value of Machinery on June 30, 2014 4,03,000
Less: Sale Value 3,25,000
Loss on Sale 78,000

Page No 15.59:

Question 25:

A company purchased second-hand machinery on 1st May, 2009 for ₹

5,85,000 and immediately spent ₹ 15,000 on its erection. On 1st October,
2010, it purchased another machine for ₹ 4,00,000. On 31st July, 2011, it
sold off the first machine for ₹ 2,50,000 and bought another for ₹ 4,20,000.
On 1st November, 2012, the second machine was also sold off for ₹
3,00,000. Depreciation was provided on the machinery @ 15% p.a. on
Equal Instalment Method.
Show the Machinery Account, Depreciation Account and Provision for
Depreciation Account assuming that the books are closed on 31st March
every year.
ANSWER:
Machinery Account
Dr. Cr.
D Amou Amou
at Particulars nt (Rs Date Particulars nt (Rs
e ) )
2 2010
0
0
9
M Bank A/c (M1) (5,58,000 + 6,00,0 Mar. 31 Balance c/d 6,00,0
ay 15,000) 00 00
0
1
6,00,0 6,00,0
00 00
2 2011
0
1
0
A Balance b/d 6,00,0 Mar. 31 Balance c/d
pr 00
.
0
1
O Bank A/c (M2) 4,00,0 M1 6,0
ct 00 0,0
. 00
0
1
M2 4,0 10,00,
0,0 000
00
10,00, 10,00,
000 000
2 2011
0
1
1
A Balance b/d July 31 Provision for Depreciation 2,02,5
pr A/c 00
.
0
1
M1 6,00,0 Bank A/c (Sale of M1) 2,50,0
00 00
M2 4,00,0 10,00, Profit and Loss A/c (Loss 1,47,5
00 000 on Sale of M1) 00
Ju Bank A/c (M3) 4,20,0 2012
ly 00
3
1
Mar. 31 Balance c/d
M2 4,0
0,0
00
M3 4,2 8,20,0
0,0 00
00
14,20, 14,20,
000 000
2 2012
0
1
2
A Balance b/d Nov. 01 Provision for Depreciation 1,25,0
pr A/c 00
.
0
1
M2 4,00,0 Bank A/c (Sale of M2) 3,00,0
00 00
M3 4,20,0 8,20,0 2013
00 00
N Profit and Loss A/c (Profit on 25,00 Mar. 31 Balance c/d (M3) 4,20,0
o Sale of M2) 0 00
v.
0
1
8,45,0 8,45,0
00 00

Depreciation Account
Dr. Cr.
Da Amount Dat Amount
Particulars Particulars
te (Rs) e (Rs)
20 201
10 0
Ma Provision for 82,500 Ma Profit & Loss A/c 82,500
r. Depreciation A/c r.
31 31
82,500 82,500
20 201
11 1
Ma Provision for 1,20,000 Ma Profit & Loss A/c 1,20,000
r. Depreciation A/c r.
31 31
1,20,000 1,20,000
20 201
12 2
Ma Provision for 1,32,000 Ma Profit & Loss A/c (1,02,000 1,32,000
r. Depreciation A/c r. + 30,000)
31 31
1,32,000 1,32,000
20 201
13 3
Ma Provision for 98,000 Ma Profit & Loss A/c (63,000 98,000
r. Depreciation A/c r. + 35,000)
31 31
98,000 98,000

Provision for Depreciation Account

Dr. Cr.
Dat Amount ( Da Amount (
Particulars Particulars
e Rs) te Rs)
201 201
0 0
Ma Balance c/d 82,500 Ma Depreciation A/c (M1) (for 11 82,500
r. r. months)
31 31
82,500 82,500
201 201
1 0
Ma Balance c/d 2,02,500 Ap Balance b/d 82,500
r. r.
31 01
201
1
Ma Depreciation A/c
r.
31
M1 90,0
00
M2 (for 6 months) 30,0 1,20,000
00
2,02,500 2,02,500
201 201
1 1
Jul Machinery A/c 2,02,500 Ap Balance b/d 2,02,500
y (82,500 + 90,000 r.
31 + 30,000) 01
201 Jul Depreciation A/c (M1) (for 30,000
2 y 4 months)
31
Ma Balance c/d 1,32,000 201
r. 2
31
Ma Depreciation A/c
r.
31
M2 60,0
00
M3 (for 8 months) 42,0 1,02,000
00
3,34,500 3,34,500
201 201
1 2
No Machinery A/c 1,25,000 Ap Balance b/d 1,32,000
v. (30,000 r.
01 + 60,000 + 35,000) 01
201 No Depreciation A/c (M2) (for 7 35,000
3 v. months)
01
Ma Balance c/d 1,05,000 201
r. 3
31
Ma Depreciation A/c (M3) 63,000
r.
31
2,30,000 2,30,000

Working Notes:

WN1: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on May 01, 2009 6,00,000
Less: Depreciation for 11 months 82,500
Value of Machinery on Apr. 01, 2010 5,17,500
Less: Depreciation 90,000
Value of Machinery on Apr. 01, 2011 4,27,500
Less: Depreciation for 4 months 30,000
Value of Machinery on July 31, 2011 3,97,500
Less: Sale Value 2,50,000
Loss on Sale 1,47,500

WN2: Calculation of Profit & Loss on Sale of M2

Particulars Amount
Value of Machinery on Oct. 01, 2010 4,00,000
Less: Depreciation for 6 months 30,000
Value of Machinery on Apr. 01, 2011 3,70,000
Less: Depreciation 60,000
Value of Machinery on Apr. 01, 2012 3,10,000
Less: Depreciation for 7 months 35,000
Value of Machinery on Nov. 01, 2012 2,75,000
Less: Sale Value 3,00,000
Profit on Sale 25,000

Page No 15.60:

Question 26:

X Ltd. purchased a plant on 1st July, 2010 costing ₹ 5,00,000. It purchased

another plant on 1st September, 2010 costing ₹ 3,00,000. On 31st
December, 2012, the plant purchased on 1st July, 2010 got out of order
and was sold for ₹ 2,15,000. Another plant was purchased to replace the
same for ₹ 6,00,000. Depreciation is to be provided at 20% p.a. according
to Writen Down Value Method. The accounts are closed every year on 31st
March.
Show the Plant Account and Provision for Depreciation Account.
ANSWER:
Plant Account
Dr.
Date Particulars Amount (Rs) Date
2010 2011
July Bank A/c (P1) 5,00,000 Mar. 31 Balance c/d
01
Sept. Bank A/c (P2) 3,00,000 P1
01
P2
8,00,000
2011 2012
Apr. Balance b/d Mar. 31 Balance c/d
01
P1 5,00,000 P1
P2 3,00,000 8,00,000 P2
8,00,000
2012 2012
Apr. Balance b/d Dec. 31 Provision for De
01
P1 5,00,000 Bank A/c (Sale
P2 3,00,000 8,00,000 Profit and Loss
Dec. Bank A/c (P3) 6,00,000 2013
31
Mar. 31 Balance c/d
P2
P3
14,00,000

Provision for Depreciation Account

Dr. Cr.
Da Amount Dat Amount
Particulars Particulars
te (Rs) e (Rs)
20 201
11 1
M Balance c/d 1,10,000 Mar Depreciation A/c
ar. . 31
31
P1 (for 9 months) 75,0
00
P2 (for 7 months) 35,0 1,10,000
00
1,10,000 1,10,000
20 201
12 1
M Balance c/d 2,48,000 Apr. Balance b/d 1,10,000
ar. 01
31
201
2
Mar Depreciation A/c
. 31
P1 85,0
00
P2 53,0 1,38,000
00
2,48,000 2,48,000
20 201
12 2
De Machinery A/c (75,000 2,11,000 Apr. Balance b/d 2,48,000
c. + 85,000 + 66,000) 01
31
20 Dec Depreciation A/c (P1) (for 9 51,000
13 . 31 months)
M Balance c/d 1,60,400 201
ar. 3
31
Mar Depreciation A/c
. 31
P2 42,
400
P3 (for 3 months) 30, 72,400
000
3,71,400 3,71,400

Working Note: Calculation of Profit & Loss on Sale of P1

Particulars Amount
Value of Plant on July 01, 2010 5,00,000
Less: Depreciation for 9 months 75,000
Value of Plant on Apr. 01, 2011 4,25,000
Less: Depreciation 85,000
Value of Plant on Apr. 01, 2012 3,40,000
Less: Depreciation for 9 months 51,000
Value of Plant on Dec. 31, 2012 2,89,000
Less: Sale Value 2,15,000
Loss on Sale 74,000

Page No 15.60:
Question 27:

On 1st August, 2010, Hindustan Toys Ltd. purchased a plant for ₹

12,00,000. The firm writes off depreciation at 10% p.a. on the diminishing
balance and the books are closed on 31st March each year. On 1st July,
2012, a part of this plant of which the original cost was ₹ 1,80,000 was sold
for ₹ 1,00,000 and on the same date a new plant was purchased for ₹
4,00,000. Show the Plant Account and Provision for Depreciation Account
for three years ending 31st March, 2013.
ANSWER:
Plant Account
Dr. Cr.
D
Amoun Amoun
at Particulars Date Particulars
t (Rs) t (Rs)
e
20 2011
10
A Bank Mar. 31 Balance c/d
ug A/c
.
01
P1 1,80, P1 1,80,
000 000
P2 10,20 12,00,0 P2 10,20 12,00,0
,000 00 ,000 00
12,00,0 12,00,0
00 00
20 2012
11
A Balance b/d Mar. 31 Balance c/d
pr.
01
P1 1,80, P1 1,80,
000 000
P2 10,20 12,00,0 P2 10,20 12,00,0
,000 00 ,000 00
12,00,0 12,00,0
00 00
20 2012
12
A Balance b/d July 01 Provision for Depreciation A/c 32,580
pr.
01
P1 1,80, Bank A/c (Sale of P1) 1,00,00
000 0
P2 10,20 12,00,0 Profit and Loss A/c (Loss on 47,420
,000 00 Sale of P1)
Ju Bank A/c (P3) 4,00,00 2013
ly 0
01
Mar. 31 Balance c/d
P2 10,20
,000
P3 4,00, 14,20,0
000 00
16,00,0 16,00,0
00 00

Provision for Depreciation Account

Dr. Cr.
Da Amount Amount
Particulars Date Particulars
te (Rs) (Rs)
20 2011
11
M Balance c/d 80,000 Mar. 31 Depreciation
ar. A/c
31
P1 (for 8 12,000
months)
P2 (for 8 68,000 80,000
months)
80,000 80,000
20 2011
12
M Balance c/d 1,92,000 Apr. 01 Balance b/d 80,000
ar.
31
2012
Mar. 31 Depreciation
A/c
P1 16,800
P2 95,200 1,12,000
1,92,000 1,92,000
20 2012
12
Jul Plant A/c (P1) (12,000 32,580 Apr. 01 Balance b/d 1,92,000
y +
01 16,800 + 3,780)
20 July 01 Depreciation A/c (P1) 3,780
13 (for 3 months)
M Balance c/d 2,78,880 2013
ar.
31
Mar. 31 Depreciation
A/c
P2 85,680
P3 (for 9 30,000 1,15,680
months)
3,11,460 3,11,460

Working Note: Calculation of Profit & Loss on Sale of P1

Particulars Amount
Value of Plant on Aug. 01, 2010 1,80,000
Less: Depreciation for 8 months 12,000
Value of Plant on Apr. 01, 2011 1,68.000
Less: Depreciation 16,800
Value of Plant on Apr. 01, 2012 1,51,200
Less: Depreciation for 3 months 3,780
Value of Plant on July 01, 2012 1,47,420
Less: Sale Value 1,00,000
Loss on Sale 47,420

Note: In order to make easy calculation, plant purchased on Aug. 01, 2010
has been divided into two parts i.e. P1 and P2.

Thus, P1: Rs 1,80,000 (sold for Rs 1,00,000 on July 01, 2012)

P2: Rs 10,20,000

Page No 15.60:

Question 28:
On 1st April 2012, Banglore Silk Ltd. purchased a machinery for ₹
20,00,000. It provides depreciation at 10% p.a. on the Written Down Value
Method and closes its books on 31st March every year. On 1st July 2014, a
part of the machinery purchased on 1st April 2012 for ₹ 4,00,000 was sold
for ₹ 3,20,000. On 1st November 2014, a new machinery was purchased
for ₹ 4,80,000. You are required to prepare Machinery Account,
Depreciation Account and Provision for Depreciation Account for three
years ending 31st March 2015.
ANSWER:
Machinery Account
Dr. Cr.
Da Amount Da Amount
Particulars Particulars
te (Rs) te (Rs)
20 20
12 13
Ap Bank A/c Ma Balance c/d
r. r.
01 31
M1 4,00,0 M1 4,00,000
00
M2 16,00, 20,00,00 M2 16,00,00 20,00,00
000 0 0 0
20,00,00 20,00,00
0 0
20 20
13 14
Ap Balance b/d Ma Balance c/d 20,00,00
r. r. 0
01 31
M1 4,00,0 M1 4,00,000
00
M2 16,00, 20,00,00 M2 16,00,00 20,00,00
000 0 0 0
20,00,00 20,00,00
0 0
20 20
14 14
Ap Balance b/d Jul Provision for Depreciation 84,100
r. y A/c
01 01
M1 4,00,0 Jul Bank A/c (Sale of M1) 3,20,000
 00 y
01
M2 16,00, 20,00,00 20
000 0 15
Jul Profit and Loss A/c 4,100 Ma Balance c/d
y (Profit on Sale of M1) r.
01 31
No Bank A/c (M3) 4,80,000 M2 16,00,00
v. 0
01
M3 4,80,000 20,80,00
0
24,84,10 24,84,10
0 0

Depreciation Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2013 2013
Provision for 2,00,000 Mar.31 Profit and Loss 2,00,000
Mar.31
Depreciation A/c A/c
2,00,000 2,00,000
2014 2014
Provision for 1,80,000 Mar.31 Profit and Loss 1,80,000
Mar.31
Depreciation A/c A/c
1,80,000 1,80,000
2015 2015
Provision for 1,57,700 Mar.31 Profit and Loss 1,57,700
Mar.31 Depreciation A/c A/c (1,47,600 +
8,100)
1,57,700 1,57,700

Provision for Depreciation Account

Dr. Cr.
Da Amount Da Amoun
Particulars Particulars
te (Rs) te t (Rs)
20 20
13 13
M Balance c/d 2,00,000 Ma Depreciation A/c
ar. r.
31 31
M1 40,000
M2 1,60,00 2,00,00
 0 0
2,00,000 2,00,00
0
20 20
14 13
M Balance c/d 3,80,000 Ap Balance b/d 2,00,00
ar. r. 0
31 01
20
14
Ma Depreciation A/c
r.
31
M1 36,000
M2 1,44,00 1,80,00
0 0
3,80,000 3,80,00
0
20 20
14 14
Jul Machinery A/c (M1) (40,000 + 84,100 Ap Balance b/d 3,80,00
y 36,000 r. 0
01 + 8,100) 01
20 Jul Depreciation A/c (M1) (for 8,100
15 y 3 months)
01
M Balance c/d 4,53,600 20
ar. 15
31
Ma Depreciation A/c
r.
31
M2 1,29,60
0
M3 (for 5 20,000 1,49,60
months) 0
5,37,700 5,37,70
0

Working Note: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 4,00,000
Less: Depreciation 40,000
Value of Machinery on Apr. 01, 2013 3,60,000
Less: Depreciation 36,000
Value of Machinery on Apr. 01, 2013 3,24,000
Less: Depreciation for 3 months 8,100
Value of Machinery on July 01, 2014 3,15,900
Less: Sale Value 3,20,000
Profit on Sale 4,100

Note: In order to make easy calculation, machinery purchased on Apr. 01,

2012 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 4,00,000 (sold for Rs 3,20,000 on July 01, 2014)

M2: Rs 16,00,000

Page No 15.60:

Question 29:

Binny Textiles Ltd. which depreciates its machinery at 20% p.a. on

diminishing balance method, purchased a machine for ₹ 6,00,000 on 1st
October, 2010. It closes its books on 31st March every year. On 1st
January, 2012, it purchased another machine for ₹ 1,50,000. On 1st
December, 2012, one-third of the machinery purchased on 1st October,
2010 was sold for ₹ 80,000.
You are required to prepare Machinery A/c and Provision for Depreciation
A/c for the relevant years.
ANSWER:
Machinery Account
Dr. Cr.
Amoun Da Amoun
Date Particulars Particulars
t (Rs) te t (Rs)
2010 20
11
Oct. 01 Bank M Balance c/d
A/c ar.
31
M1 2,00, M1 2,00,
 000 000
M2 4,00, 6,00,00 M2 4,00, 6,00,00
000 0 000 0
6,00,00 6,00,00
0 0
2011 20
12
Apr. 01 Balance M Balance c/d
b/d ar.
31
M1 2,00, M1 2,00,
000 000
M2 4,00, 6,00,00 M2 4,00,
000 0 000
2012 M3 1,50, 7,50,00
000 0
Dec. 01 Bank A/c 1,50,00
(M3) 0
7,50,00 7,50,00
0 0
2012 20
12
Apr. 01 Balance De Provision for Depreciation A/c 75,200
b/d c.
01
M1 2,00, Bank A/c (Sale of M1) 80,000
000
M2 4,00, Profit and Loss A/c (Loss on Sale of 44,800
000 M1)
M3 1,50, 7,50,00 20
000 0 13
M Balance c/d
ar.
31
M2 4,00,
000
M3 1,50, 5,50,00
000 0
7,50,00 7,50,00
0 0

Provision for Depreciation Account

Dr. Cr.
Da Particulars Amount Da Particulars Amount
te (Rs) te (Rs)
20 20
11 11
M Balance c/d 60,000 M Depreciation A/c
ar. ar.
31 31
M1 (for 6 months) 20,00
0
M2 (for 6 months) 40,00 60,000
0
60,000 60,000
20 20
12 11
M Balance c/d 1,75,500 Ap Balance b/d 60,000
ar. r.
31 01
20
12
M Depreciation A/c
ar.
31
M1 36,00
0
M2 72,00
0
M3 (for 3 months) 7,500 1,15,500
1,75,500 1,75,500
20 20
12 12
De Machinery A/c (M1) (20,000 75,200 Ap Balance b/d 1,75,500
c. + r.
01 36,000 + 19,200) 01
20 De Depreciation A/c (M1) (for 8 19,200
13 c. months)
01
M Balance c/d 2,05,600 20
ar. 13
31
M Depreciation A/c
ar.
31
M2 57,60
0
M3 28,50 86,100
0
2,80,800 2,80,800
Working Note: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Oct. 01, 2010 2,00,000
Less: Depreciation for 6 months 20,000
Value of Machinery on Apr. 01, 2011 1,80,000
Less: Depreciation 36,000
Value of Machinery on Apr. 01, 2012 1,44,000
Less: Depreciation for 8 months 19,200
Value of Machinery on Dec. 01, 2012 1,24,800
Less: Sale Value 80,000
Loss on Sale 44,800

Note: In order to make easy calculation, machinery purchased on Apr. 01,

2012 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 2,00,000 (1/3rd value of machinery, sold for Rs 80,000 on Dec.
01, 2012)

M2: Rs 4,00,000 (2/3rd value of machinery)

Question 30:

The following balances appear in the books of Y Ltd:

₹
Machinery A/c as on 1-4-2014 8,00,000
Provision for Depreciation A/c as on 1-4-2014 3,10,000

On 1-7-2014, a machinery which was purchased on 1-4-2011 for ₹ 1,20,000

was sold for ₹ 50,000 and on the same date another machinery was
purchased for ₹ 3,20,000.
The firm has been charging depreciation at 15% p.a. on Original Cost Method
and closes its books on 31st March every year. Prepare the Machinery A/c
and Provision for Depreciation A/c for the year ending 31st March 2015.
ANSWER:
Machinery Account
Dr. Cr.
Da Amoun Dat Amou
Particulars Particulars
te t (Rs) e nt (Rs)
20 201
14 4
Ap Balance b/d (6,80,000 + 8,00,00 July Provision for Depreciation A/c 58,500
r. 1,20,000) 0 01
01
Jul Bank A/c 3,20,00 Bank A/c (Sale) 50,000
y 0
01
Profit and Loss A/c (Loss on Sale) 11,500
201
5
Mar. Balance c/d 10,00,
31 000
11,20,0 11,20,
00 000

Provision for Depreciation Account

Dr. Cr.
Amou Amou
Date Particulars Date Particulars
nt (Rs) nt (Rs)
2014 2014
July Machinery A/c (54,000 + 58,500 Apr. 01 Balance b/d 3,10,00
01 4,500) 0
2015 2015
Mar. Balance c/d 3,94,00 Mar. 31 Depreciation A/c (WN2) 1,42,50
31 0 0
4,52,50 4,52,20
0 0

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on Apr. 01, 2011 1,20,000
Less: Depreciation for 3 Years 3 months 58,500
Value of Machinery July 01, 2014 61,500
Less: Sale Value 50,000
Loss on Sale 11,500

WN2: Depreciation charged during the year

Particulars Amount
On Rs 6,80,000 @ 15% 1,02,000
On Rs 1,20,000 @ 15% for 3 months 4,500
On Rs 3,20,000 @ 15% for 9 months 36,000
1,42,500

Question 31:

On 1st April, 2010, following balances appeared in the books of M/s

Krishna Traders:
₹
Furniture Account 50,000
Provision for Depreciation on Furniture Account 22,000

On 1st October, 2010 a part of Furniture purchased for ₹ 20,000 on 1st April,
2006 was sold for ₹ 5,000. On the same date a new furniture costing ₹
25,000 was purchased.
The depreciation was provided @ 10% p.a. on original cost of the asset and
no depreciation was charged on the asset in the year of sale. Prepare
'Furniture Account' and 'Provision for Depreciation Account' for the year
ending 31st March, 2011.
ANSWER:
Furniture Account
Dr. Cr.
Dat Amount ( Dat Amount (
Particulars Particulars
e Rs) e Rs)
201 201
0 0
Apr Balance b/d (30,000 + 50,000 Oct. Provision for Depreciation 8,000
. 01 20,000) 01 A/c
Oct. Bank A/c 25,000 Oct. Bank A/c (Sale ) 5,000
01 01
Oct. Profit and Loss A/c (Loss 7,000
01 on Sale)
201
1
Mar Balance c/d 55,000
. 31
75,000 75,000

Provision for Depreciation Account

Dr. Cr.
Amoun Amoun
Date Particulars t Date Particulars t
(Rs) (Rs)
2010 2010
Oct.01 Furniture A/c 8,000 Apr.01 Balance b/d 22,000
2011 2011
Mar.3 Balance c/d 18,250 Mar.3 Depreciation A/c (WN2) 4,250
1 1
26,250 26,250

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Furniture on Apr. 01, 2006 20,000
Less: Depreciation for 4 Years @ 10% 8,000
Value of Furniture on Oct. 01, 2010 12,000
Less: Sale Value 5,000
Loss on Sale 7,000

WN2: Depreciation charged during the year

Particulars Amount
On Rs 30,000 @ 10% 3,000
On Rs 25,000 @ 10% for 6 months 1,250
4,250
Question 32:

Books of Mumbai Chemicals Ltd. showed the following balances on 1st

April 2012:
Machinery A/c ₹ 10,00,000
Provision for Depreciation A/c ₹ 4,05,000

On 1st April, 2012, a machine which had a cost of ₹ 2,00,000 on 1st October,
2009 was sold for ₹ 80,000. The firm writes off depreciation @ 10% p.a.
under the Reducing Balance Method and its accounts are made up on 31st
March each year. You are required to prepare the Machinery A/c and
Provision for Depreciation A/c for the year ending 31st March, 2013.
ANSWER:
Machinery Account
Dr. Cr.
Amount ( Amount
Date Particulars Date Particulars
Rs) (Rs)
2012 2012
Apr. Balance b/d 10,00,000 Apr. Provision for Depreciation A/c 46,100
01 (8,00,000 + 01
2,00,000)
Bank A/c (Sale ) 80,000
Profit and Loss A/c (Loss on Sale) 73,900
2013
Mar. Balance c/d 8,00,000
31
10,00,000 10,00,00
0

Provision for Depreciation Account

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2012
Apr. Machinery A/c 46,100 Apr. 01 Balance b/d 4,05,000
01
2013 M1 46,100
Mar. Balance c/d 4,03,010 M2 3,28,900 4,05,000
31
2013
Mar. 31 Depreciation A/c (WN2) 44,110
4,49,110 4,49,110

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on Oct. 01, 2009 2,00,000
Less: Depreciation for 6 months 10,000
Value of Machinery on Apr. 01, 2010 1,90,000
Less: Depreciation 19,000
Value of Machinery on Apr. 01, 2011 1,71,000
Less: Depreciation 17,100
Value of Machinery on Apr. 01,2012 1,53,900
Less: Sale Value 80,000
Loss on Sale 73,900

WN2: Calculation of Depreciation on remaining value of Machinery

Question 33:

On 1st July, 2010, X Ltd. purchased a machinery for ₹ 15,00,000.

Depreciation is provided @ 20% p.a. on the original cost of the machinery
and books are closed on 31st March each year. On 31st May, 2012, a part
of this machine purchased on 1st July 2010 for ₹ 3,60,000 was sold for ₹
2,40,000 and on the same date new machinery was purchased for ₹
4,20,000. You are required to prepare (a) Machinery Account, (b) Provision
for Depreciation Account, and (c) Machinery Disposal Account.
ANSWER:
Machinery Account
Dr. Cr.
Da Amount Amount
Particulars Date Particulars
te (Rs) (Rs)
20 2011
10
Jul Bank A/c (11,40,000 15,00,00 Mar. Balance c/d 15,00,00
y + 3,60,000) 0 31 0
01
15,00,00 15,00,00
0 0
20 2012
11
Ap Balance b/d 15,00,00 Mar. Balance c/d 15,00,00
r. 0 31 0
01
15,00,00 15,00,00
0 0
20 2012
12
Ap Balance b/d 15,00,00 May Machinery Disposal A/c 3,60,000
r. 0 31
01
M Bank A/c 4,20,000 2013
ay
31
Mar. Balance c/d 15,60,00
31 0
19,20,00 19,20,00
0 0

Machinery Disposal A/c

Dr. Cr.
Amou Amou
Da
Particulars nt Date Particulars nt
te
(Rs) (Rs)
201 2012
2
Ma Machinery A/c 3,60,0 May Provision for 1,38,0
y 00 31 Depreciation A/c 00
31
Ma Profit and Loss A/c 18,00 Bank A/c (Sale) 2,40,0
y (Profit on Sale) 0 00
31
3,78,0 3,78,0
00 00

Provision for Depreciation Account

Dr. Cr.
Amou
Dat Dat Amount (
Particulars nt Particulars
e e Rs)
(Rs)
201 201
1 1
Ma Balance c/d 2,25,00 Ma Balance b/d (for 9 months) 2,25,000
r. 0 r.
31 31
2,25,00 2,25,000
0
201 201
2 1
Ma Balance c/d 5,25,00 Apr Balance b/d 2,25,000
r. 0 . 01
31
201
2
Ma Depreciation A/c 3,00,000
r.
31
5,25,00 5,25,000
0
201 201
2 2
Ma Machine Disposal A/c (54,000 1,38,00 Apr Balance b/d 5,25,000
y + 72,000 + 12,000) 0 . 01
31
201 Ma Depreciation (for 2 12,000
3 y months)
31
Ma Balance c/d 6,97,00 201
r. 0 3
31
Ma Depreciation A/c (WN2) 2,98,000
r.
31
8,35,00 8,35,000
0

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on July 01, 2010 3,60,000
Less: Depreciation for 9 months 54,000
Value of Machinery on Apr. 01, 2011 3,06,000
Less: Depreciation 72,000
Value of Machinery on Apr. 01, 2012 2,34,000
Less: Depreciation for 2 months 12,000
Value of Machinery on May 31, 2012 2,22,000
Less: Sale Value 2,40,000
Profit on Sale 18,000

WN2: Depreciation charged during the year

Particulars Amount
On Rs 11,40,000 @ 20% 2,28,000
On Rs 4,20,000 @ 20% for 10 months 70,000
2,98,000

Question 34:

ABC Ltd. purchased on 1st April 2006 a small plant for ₹ 1,00,000. On 1st
October 2006 an additional plant was purchased costing ₹ 50,000. On 1st
October 2007 the plant purchased on 1st April 2006, having become
obsolete, was sold for ₹ 40,000.
Depreciation is provided @10% p.a. on original cost on 31st March every
year. Show the plant A/c, Provision for Depreciation A/c and Plant Disposal
A/c for the Years 2006-07 and 2007-08.
ANSWER:
Plant Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2006 2007
Apr. 01 Bank A/c 1,00,000 Mar. 31 Balance c/d 1,50,000
Oct. 01 Bank A/c 50,000
1,50,000 1,50,000
2007 2007
Apr. 01 Balance b/d 1,50,000 Oct. 01 Plant Disposal A/c 1,00,000
2008
Mar. 31 Balance c/d 50,000
1,50,000 1,50,000

Plant Disposal A/c

Dr. Cr.
Amou Amou
Date Particulars nt Date Particulars nt
(Rs) (Rs)
2007 2007
Oct. Plant A/c 1,00,00 Oct. Provision for Depreciation A/c 15,000
01 0 01
Bank A/c (Sale) 40,000
Profit and Loss A/c 45,000
(Loss on Sale)
1,00,00 1,00,00
0 0

Provision for Depreciation Account

Dr. Cr.
Amou Amou
Dat
Particulars nt Date Particulars nt
e
(Rs) (Rs)
200 2007
7
Ma Balance c/d 12,500 Mar. 31 Balance b/d 12,500
r.
31
12,500 12,500
200 2007
7
Oct Plant Disposal A/c (10,000+ 15,000 Apr. 01 Balance b/d 12,500
. 01 5,000)
200 Oct. 01 Depreciation A/c 5,000
8
Ma Balance c/d 7,500 2008
r.
31
Mar. 31 Depreciation A/c (WN2) 5,000
22,500 22,500

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on Apr. 01, 2006 1,00,000
Less: Depreciation 10,000
Value of Machinery on Apr. 01, 2007 90,000
Less: Depreciation for 6 months 5,000
Value of Machinery on Oct. 01, 2007 85,000
Less: Sale Value 40,000
Loss on Sale 45,000

WN2: Depreciation charged during the year

Question 35:

On 1st September 2011, Gopal Ltd. purchased a plant for ₹ 10,20,000. On

1st July 2012 another plant was purchased for ₹ 6,00,000. The firm writes
off depreciation @ 10% p.a. on original cost and its accounts are closed
every year on 31st March. On 1st October 2014, a part of the second plant
purchased on 1st July 2012 for ₹ 1,80,000 was sold for ₹ 1,10,000. On 1st
December 2014, another plant was purchased for ₹ 3,00,000.
Prepare Plant Account, Provision for Depreciation Account and Plant
Disposal Account.
ANSWER:
Plant Account
Dr. Cr.
Da Amount ( Amount (
Particulars Date Particulars
te Rs) Rs)
201 2012
1
Sep Bank A/c (P1) 10,20,000 Mar. 31 Balance c/d 10,20,000
t.
01
10,20,000 10,20,000
201 2013
2
Ap Balance b/d 10,20,000 Mar. 31 Balance c/d
r.
01
Jul Bank A/c P1 10,20,0
y 00
01
P2 1,80,00 P2 1,80,00
0 0
P3 4,20,00 6,00,000 P3 4,20,00 16,20,000
0 0
16,20,000 16,20,000
201 2014
3
Ap Balance b/d Mar. 31 Balance c/d 16,20,000
r.
01
P1 10,20,0 P1 10,20,0
00 00
P2 1,80,00 P2 1,80,00
0 0
P3 4,20,00 16,20,000 P3 4,20,00 16,20,000
0 0
16,20,000 16,20,000
201 2014
4
Ap Balance b/d Oct. 01 Plant Disposal A/c 1,80,000
r. (P2)
01
P1 10,20,0 2015
00
P2 1,80,00 Mar. 31 Balance c/d
0
P3 4,20,00 16,20,000 P1 10,20,0
0 00
De Bank A/c (M4) 3,00,000 P3 4,20,00
c. 0
01
P4 3,00,00 17,40,000
0
19,20,000 19,20,000

Plant Disposal A/c

Dr. Cr.
Dat Amount ( Amount (
Particulars Date Particulars
e Rs) Rs)
201 2014
4
Oct Plant A/c 1,80,000 Oct. 01 Provision for Depreciation 40,500
. 01 A/c
Bank A/c (Sale of P2) 1,10,000
Profit and Loss A/c 29,500
(Loss on Sale of P2)
1,80,000 1,80,000

Provision for Depreciation Account

Dr. Cr.
Dat Amount ( Dat Amount
Particulars Particulars
e Rs) e (Rs)
201 201
2 2
Mar. Balance c/d 59,500 Mar Depreciation A/c (for 7 months) 59,500
31 .31
59,500 59,500
201 201
3 2
Mar. Balance c/d 2,06,500 Apr. Balance b/d 59,500
31 01
201
3
Mar Depreciation A/c
.31
P1 1,02,0
00
P2 (for 9 months) 13,50
0
P3 (for 9 months) 31,50 1,47,000
0
2,06,500 2,06,500
201 201
4 3
Mar. Balance c/d 3,68,500 Apr. Balance b/d 2,06,500
31 01
201
4
Mar Depreciation A/c
.31
P1 1,02,0
00
P2 18,00
0
P3 42,00 1,62,000
0
3,68,500 3,68,500
201 201
4 4
Oct. Plant Disposal A/c 40,500 Apr. Balance b/d 3,68,500
01 (P2) (13,500 01
+ 18,000 + 9,000)
201 Oct. Depreciation A/c (P2) (for 6 9,000
5 01 months)
Mar. Balance c/d 4,91,000 201
31 5
Mar Depreciation A/c
.31
P1 1,02,0
00
P3 42,00
0
P4 (for 4 months) 10,00 1,54,000
0
5,31,500 5,31,500
Working Note: Calculation of Profit & Loss on Sale of P2

Particulars Amount
Value of Plant on July 01, 2012 1,80,000
Less: Depreciation @ 10% for 9 months 13,500
Value of Plant on Apr. 01, 2013 1,66,500
Less: Depreciation @ 10% 18,000
Value of Plant on Apr. 01, 2014 1,48,500
Less: Depreciation @ 10% for 6 months 9,000
Value of Plant on Oct. 01, 2014 1,39,500
Less: Sale Value 1,10,000
Loss on Sale 29,500

Note: In order to make easy calculation, plant purchased on July 01, 2012 has
been divided into two parts i.e. P2 and P3.

Thus, P2: Rs 1,80,000 (sold for Rs 1,10,000 on Oct. 01, 2014)

P3: Rs 4,20,000

Page No 15.62:

Question 36:

On 1st June, 2010, Kedarnath Ltd. purchased a machinery for ₹

27,00,000. Depreciation is provided @ 10% p.a. on diminishing balance
method and the books are closed on 31st March each year. On 1st
October, 2012, a part of the machinery purchased on 1st June, 2010 for ₹
6,00,000 was sold for ₹ 3,50,000 and on the same date another machinery
was purchased for ₹ 8,00,000. You are required to show (i) Machinery A/c,
(ii) Provision for Dep. A/c, and (iii) Machinery Disposal A/c.
ANSWER:
Machinery Account
Dr. Cr.
Dat Particulars Amount ( Dat Particulars Amount (
 e Rs) e Rs)
201 201
0 1
Jun Bank A/c Mar. Balance
e 31 c/d
01
M1 6,00,00 M1 6,00,00
0 0
M2 21,00,0 27,00,000 M2 21,00,0 27,00,000
00 00
27,00,000 27,00,000
201 201
1 2
Apr Balance b/d Mar. Balance
. 01 31 c/d
M1 6,00,00 M1 6,00,00
0 0
M2 21,00,0 27,00,000 M2 21,00,0 27,00,000
00 00
27,00,000 27,00,000
201 201
2 2
Ma Balance b/d Oct. Machinery Disposal 6,00,000
r. 01 A/c (M1)
31
M1 6,00,00 201
0 3
M2 21,00,0 27,00,000 Mar. Balance
00 31 c/d
Oct Bank A/c (M3) 8,00,000 M2 21,00,0
. 01 00
M3 8,00,00 29,00,000
0
35,00,000 35,00,000

Machinery Disposal A/c

Dr. Cr.
Amount ( Dat Amount (
Date Particulars Particulars
Rs) e Rs)
2012 201
2
Oct. Machinery A/c 6,00,000 Oct. Provision for Depreciation 1,29,750
01 01 A/c
Bank A/c (Sale of M1) 3,50,000
 Profit and Loss A/c (Loss on 1,20,250
Sale of M1)
6,00,000 6,00,000

Provision for Depreciation Account

Dr. Cr.
Dat Amount ( Amount (
Particulars Date Particulars
e Rs) Rs)
201 2011
1
Ma Balance c/d 2,25,000 Mar. Balance b/d
r. 31
31
M1(for 10 50,000
months)
M2 (for 10 1,75,0 2,25,000
months) 00
2,25,000 2,25,000
201 2011
2
Ma Balance c/d 4,72,500 Apr. Balance b/d 2,25,000
r. 01
31
2012
Mar. Depreciation
31 A/c
M1 55,000
M2 1,92,5 2,47,500
00
4,72,500 4,72,500
201 2012
2
Oct Machine Disposal A/c (M1) 1,29,750 Apr. Balance b/d 4,72,500
. 01 (50,000 + 01
55,000 + 24,750)
201 Oct. Depreciation (M1) 24,750
3 01
Ma Balance c/d 5,80,750 2013
r.
31
Mar. Depreciation A/c (M1)
31 (for 6 months)
M2 1,73,2
50
 M3 (for 6 40,000 2,13,250
months)
7,10,500 7,10,500

Working Note: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on June 01, 2010 6,00,000
Less: Depreciation @ 10% for 10 months 50,000
Value of Machinery on Apr. 01, 2011 5,50,000
Less: Depreciation @ 10% 55,000
Value of Machinery on Apr. 01, 2012 4,95,000
Less: Depreciation @ 10% for 6 months 24,750
Value of Machinery on Oct. 01, 2012 4,70,250
Less: Sale Value 3,50,000
Loss on Sale 1,20,250

Note: In order to make easy calculation, machinery purchased on June 01,

2010 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 6,00,000 (sold for Rs 3,50,000 on Oct. 01, 2012)

M2: Rs 21,00,000

Page No 15.62:

Question 37:

On 1st Jan. 2012, Panjim Dryfruits Ltd. bought a plant for ₹ 15,00,000. The
company writes off depreciation @ 20% p.a. on Written Down Value
Method and closes its books on 31st March every year. On 1st Oct. 2014, a
part of the plant purchased on 1st Jan. 2012 for ₹ 3,00,000 was sold for ₹
1,75,000. On 1st Jan. 2015 a fresh plant was purchased for ₹ 5,00,000.
Prepare Plant A/c, Provision for Dep. A/c and Plant Disposal A/c.
ANSWER:
Plant Account
Dr. Cr.
Dat Amount ( Amount (
Particulars Date Particulars
e Rs) Rs)
201 2012
2
Jan. Bank A/c Mar. Balance c/d
01 31
P1 3,00,00 P1 3,00,00
0 0
P2 12,00,0 15,00,000 P2 12,00,0 15,00,000
00 00
15,00,000 15,00,000
201 2013
2
Apr Balance b/d Mar. Balance c/d
. 01 31
P1 3,00,00 P1 3,00,00
0 0
P2 12,00,0 15,00,000 P2 12,00,0 15,00,000
00 00
15,00,000 15,00,000
201 2014
3
Apr Balance b/d Mar. Balance c/d
. 01 31
P1 3,00,00 P1 3,00,00
0 0
P2 12,00,0 15,00,000 P2 12,00,0 15,00,000
00 00
15,00,000 15,00,000
201 2014
4
Apr Balance b/d Oct. Plant Disposal A/c (P1) 3,00,000
. 01 01
P1 3,00,00 2015
0
P2 12,00,0 15,00,000 Mar. Balance c/d
00 31
201 P2 12,00,0
5 00
Jan. Bank A/c (P3) 5,00,000 P3 5,00,00 17,00,000
01 0
20,00,000 20,00,000

Plant Disposal A/c

Dr. Cr.
Amount Dat Amount
Date Particulars Particulars
(Rs) e (Rs)
2014 201
4
Oct. Plant A/c 3,00,000 Oct. Provision for Depreciation 1,35,840
01 01 A/c
Profit and Loss A/c 10,840 Bank A/c (Sale of P1) 1,75,000
(Profit on Sale of P1)
3,10,840 3,10,840

Provision for Depreciation Account

Dr. Cr.
Dat Amount Amount
Particulars Date Particulars
e (Rs) (Rs)
201 2012
2
Mar Balance c/d 75,000 Mar. Depreciation A/c
. 31 31
P1 (for 3 months) 15,00
0
P2 (for 3 months) 60,00 75,000
0
75,000 75,000
201 2012
3
Mar Balance c/d 3,60,000 Apr. Balance b/d 75,000
. 31 01
2013
Mar. Depreciation A/c
31
P1 57,00
0
P2 2,28,0 2,85,000
00
3,60,000 3,60,000
201 2013
4
Mar Balance c/d 5,88,000 Apr. Balance b/d 3,60,000
. 31 01
2014
Mar. Depreciation A/c
31
P1 45,60
 0
P2 1,82,4 2,28,000
00
5,88,000 5,88,000
201 2014
4
Oct Plant Disposal A/c 1,35,840 Apr. Balance b/d 5,88,000
. 01 (P1) 01
(15,000+57,000+45,6
00+18,240)
201 Oct. Depreciation A/c (M1) (for 6 18,240
5 01 months)
Mar Balance c/d 6,41,320 2015
. 31
Mar. Depreciation A/c
31
21 1,45,
920
P 3 (for 3 months) 25,00 1,70,920
0
7,77,160 7,77,160

Working Notes: Calculation of Profit & Loss on Sale of P1

Particulars Amount
Value of Plant on Jan. 01, 2012 3,00,000
Less: Depreciation for 3 months 15,000
Value of Plant on Apr. 01, 2012 2,85,000
Less: Depreciation 57,000
Value of Plant on Apr. 01, 2013 2,28,000
Less: Depreciation 45,600
Value of Plant on Apr. 01, 2014 1,82,400
Less: Depreciation for 3 months 18,240
Value of Plant on Oct. 01, 2014 1,64,160
Less: Sale Value 1,75,000
Profit on Sale 10,840

Note: In order to make easy calculation, plant purchased on Jan 01, 2012 has
been divided into two parts i.e. P1 and P2.

Thus, P1: Rs 3,00,000 (sold for Rs 1,75,000 on Oct. 01, 2014)

P2: Rs 12,00,000

Page No 15.62:

Question 38:

The following balances appear in the books of M/s Amrit:

₹
1st April, 2004 Machinery A/c 60,000
1st April, 2004 Provision for depreciation A/c 36,000

On 1st April, 2004, they decided to dispose off a machinery for ₹ 8,400 which was
purchased on 1st April, 2000 for ₹ 16,000.
You are required to prepare Machinery A/c, Provision for Depreciation A/c and
Machinery Disposal A/c for 2004-05. Depreciation was charged at 10% p.a on
original cost method.
ANSWER:
Machinery Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2004 2004
Apr. Balance b/d 60,000 Apr. 01 Machinery 16,000
01 Disposal A/c
2005
Mar. 31 Balance c/d 44,000
60,000 60,000

Provision for Depreciation Account

Dr. Cr.
Amount ( Dat Amount (
Date Particulars Particulars
Rs) e Rs)
2004 200
4
Apr. Machinery Disposal A/c 6,400 Apr Balance b/d 36,000
01 (1,600 × 4) . 01
2005 200
5
Mar. Balance c/d 34,000 Mar Depreciation A/c (WN2) 4,400
31 . 31
 40,400 40,400

Machinery Disposal Account

Dr. Cr.
Dat Amount ( Amount (
Particulars Date Particulars
e Rs) Rs)
200 2004
4
Apr Machinery A/c 16,000 Apr. 01 Provision for 6,400
. 01 Depreciation A/c
Apr. 01 Bank A/c (Sale) 8,400
Apr. 01 Profit and Loss A/c 1,200
(Loss on Sale)
16,000 16,000

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Furniture on Apr. 01, 2004 16,000
Less: Depreciation for 4 years @ 10% p.a. 6,400
Value of Furniture on Apr. 01, 2004 9,600
Less: Sale Value 8,400
Loss on Sale 1,200

WN2: Calculation of Depreciation on remaining value of Machinery

Page No 15.63:

Question 39:

On 1.10.2008, X Ltd. purchased a machinery for ₹ 2,50,000. A part of machinery

which was purchased for ₹ 20,000 on 1.10.2008 became obsolete and was
disposed off on 1.1.2011 (having a book value of ₹ 17,100 on 1.4.2010) for
₹ 2,000.
Depreciation is charged @10% annually on written down value. Prepare
machinery disposal account and also show your workings. The books being
closed on 31st March of every year.
ANSWER:
Machinery Disposal Account
Dr. Cr.
Amount ( Amount (
Date Particulars Date Particulars
Rs) Rs)
2011 2011
Jan. Machinery 15,817 Jan. Provision for Depreciation A/c 4,183
01 A/c 01 (1,000 + 1,900 + 1,283)

Jan. Bank A/c (Sale) 2,000

01
Profit and Loss A/c (Loss on Sale) 13,817
15,817 15,817

Working Note: Calculation of Profit & Loss on Sale

Particulars Amount
Value of Machinery on Oct. 01, 2008 20,000
Less: Depreciation for 6 months 1,000
Value of Machinery on Apr. 01, 2009 19,000
Less: Depreciation 1,900
Value of Machinery on Apr. 01, 2010 17,100
Less: Depreciation for 9 months 1,283
Value of Machinery on Jan. 01, 2011 15,817
Less: Sale Value 2,000
Loss on Sale 13,817

Page No 15.63:

Question 40:

A limited company purchased on 01-01-2009 a plant for ₹ 38,000 and

spent ₹ 2,000 for carriage and brokerage. On 01-04-2010 it purchased
additional plant costing ₹ 20,000. On 01-08-2011 the plant purchased on
01-04-2009 was sold for ₹ 25,000. On the same date, the plant purchased
on 01-04-2010 was sold at a profit of ₹ 2,800. Depreciation is provided
@10% per annum on diminishing balance method every year. Accounts
are closed on 31st December every year. Show the plant A/c for 3 years.
ANSWER:
Plant Account
Dr. Cr.
Amount ( Amount (
Date Particulars Date Particulars
Rs) Rs)
2009 2009
Jan. 01 Bank A/c (P1) (38,000 + 40,000 Dec. Depreciation A/c 4,000
2,000) 31
Balance c/d 36,000
40,000 40,000
2010 2010
Jan. 01 Balance b/d 36,000 Dec. Depreciation
31 A/c
Apr .01 Bank A/c (P2) 20,000 P1 3,600
P2 (for 9 1,500 5,100
months)
Dec. Balance c/d
31
P1 32,40
0
P2 18,50 50,900
0
56,000 56,000
2011 2011
Jan. 01 Balance b/d Aug. Depreciation A/c (P1) 1,890
01
P1 32,40 Bank A/c (Sale of P1) 25,000
0
P2 18,50 50,900 Profit and Loss A/c 5,510
0 (Loss on Sale of P1)
Aug. Profit and Loss A/c 2,800 Aug. Depreciation A/c (P2) 1,080
01 (Profit on Sale of P2) 01
Bank A/c (Sale of P2) 20,220
53,700 53,700

Working Notes:
WN1: Calculation of Profit & Loss on Sale of P1

Particulars Amount
Value of Plant on Apr. 01, 2011 32,400
Less: Depreciation for 7 months 1,890
Value of Plant on Aug. 01, 2011 30,510
Less: Sale Value 25,000
Loss on Sale 5,510

WN2: Calculation of Sale Price of P2

Particulars Amount
Value of Plant on Apr. 01, 2011 18,500
Less: Depreciation for 7 months 1,080
Value of Plant on Aug. 01, 2011 17,420
Add: Profit on Sale 2,800
Sale Value 20,220

Page No 15.63:

Question 41:

On 1st April 2008, Verma & Co. purchased two machines of ₹ 40,000
each. On 1st July 2009 and 1st Oct. 2009 additional machinery were
purchased for ₹ 30,000 and ₹ 20,000 respectively. On 1st April 2010 one
of the machines purchased on 1st April 2008 became obsolete and was
sold for ₹ 21,000. Depreciation is charged @ 15% p.a. on written down
value method on 31st March each year. You are required to prepare
Machinery Account for 3 years.
ANSWER:
Machinery Account
Dr. Cr.
Da Amount Amount
Particulars Date Particulars
te (Rs) (Rs)
20 2009
08
Ap Bank Mar. Depreciation A/c
r. A/c 31
01
M1 40,0 M1 6,0
00 00
M2 40,0 80,000 M2 6,0 12,000
00 00
Mar. Balance c/d
31
M1 34,
000
M2 34, 68,000
000
80,000 80,000
20 2010
09
Ap Balance Mar. Depreciation A/c
r. b/d 31
01
M1 34,0 M1 5,1
00 00
M2 34,0 68,000 M2 5,1
00 00
Jul Bank A/c (M3) 30,000 M3 (for 9 months) 3,3
y 75
01
Oc Bank A/c (M4) 20,000 M4 (for 6 months) 1,5 15,075
t. 00
01
Mar. Balance c/d
31
M1 28,
900
M2 28,
900
M3 26,
625
M4 18, 1,02,925
500
1,18,000 1,18,000
20 2010
10
Ap Balance b/d Apr. Bank A/c (Sale of M1) 21,000
r. 01
01
M1 28 Profit and Loss A/c (Loss on Sale of 7,900
,9 M1)
 00
M2 28 2011
,9
00
M3 26 Mar. Depreciation A/c
,6 31
25
M4 18 1,02,925 M2 4,3
,5 35
00
M3 3,9
94
M4 2,7 11,104
75
Mar. Balance c/d
31
M2 24,
565
M3 22,
631
M4 15, 62,921
725
1,02,925 1,02,925

Working Notes: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2010 28,900
Less: Sale Value 21,000
Loss on Sale 7,900

Page No 15.63:

Question 42:

A Limited purchased a machine on 1st July 2011 for ₹ 3,00,000 and on 1st
January 2013 bought another machinery for ₹ 2,00,000. On 1st August
2013 machine bought in 2011 was sold for ₹ 1,60,000. Another machine
was bought for ₹ 1,50,000 on 1st October 2013. It was decided to provide
depreciation @ 10% p.a. on written down value method assuming books
are closed on 31st March each year. Prepare Machinery Account and
Provision for depreciation account for 3 years.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2011 2012
Jul. 01 Bank A/c (M1) 3,00,000 Mar. 31 Balance c/d 3,00,000

3,00,000 3,00,000
2012 2013
Apr. 01 Balance b/d 3,00,000 Mar. 31 Balance c/d
2013 M1 3,00,000
Jan.01 Bank A/c (M2) 2,00,000 M2 2,00,000 5,00,000
5,00,000 5,00,000
2013 2013
Apr. 01 Balance b/d 5,00,000 Aug.01 Provision for 58,575
Depreciation A/c
(on M1 for 4 months)
M1 3,00,000 Bank A/c (Sale of M1) 1,60,000
M2 2,00,000 Profit and Loss A/c 81,425
(Loss on Sale)
2014
Oct.01 Bank A/c (M3) 1,50,000 Mar.31 Balance c/d
M2 2,00,000
M3 1,50,000 3,50,000
6,50,000 6,50,000

Working Notes: Calculation of Profit or Loss on Sale

Particulars Amount
Value of M1 as on July 01, 2011 3,00,000
Less: Depreciation 58,575
Value of M1 as on Aug. 01, 2013 2,41,425
Less: Sale Value 1,60,000
Loss on Sale 81,425

Provision for Depreciation Account

Dr. Cr.
Amou Amou
Date Particulars nt Date Particulars nt
(Rs) (Rs)
2012 2012
Mar. Balance c/d 22,50 Mar. Depreciation A/c 22,500
31 0 31
22,50 22,500
0
2013 2012
Mar. Balance c/d Apr.01 Balance b/d 22,500
31
M1 50,2 2013
50
M2 5,00 55,2 Mar. Depreciation A/c
0 50 31
M1 27,7
50
M2 5,00 32,7
0 50
55,2 55,2
50 50
2013 2013
Aug.0 Machinery A/c 58,57 Apr.01 Balance b/d
1 5
2014 M1 50,2
50
Mar. Balance c/d M2 5,00
31 0 55,2
50
M2 24,5 Aug. Depreciation A/c (M1) 8,32
00 01 5
M3 7,50 32,0 2014
0 00
Mar.31 Depreciation A/c
19,50
M2 0

M3 7,50 27,0
0 00
90,57 90,575
5