Question 16:
Given Data:
1st April 2022: Purchased a plant for ₹1,00,000.
1st October 2022: Purchased an additional plant for ₹50,000.
1st October 2023: The plant purchased on 1st April 2022 is sold for
₹40,000.
Depreciation rate: 10% per annum on original cost (Straight Line
Method).
Accounting year ends: 31st March.
Step 1: Calculate Depreciation
For the plant purchased on 1st April 2022 (₹1,00,000)
Depreciation for 2022-23:
o ₹1,00,000 × 10% = ₹10,000
Depreciation for 2023-24 (before sale on 1st October 2023):
o Since it is sold after 6 months, depreciation for 6 months =
(₹1,00,000 × 10%) × 6/12 = ₹5,000
For the plant purchased on 1st October 2022 (₹50,000)
Depreciation for 2022-23:
o (₹50,000 × 10%) × 6/12 = ₹2,500
Depreciation for 2023-24:
o ₹50,000 × 10% = ₹5,000
Step 2: Record Transactions in the Accounts
Plant Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Apr- To Bank A/c (Old 01-Oct- By Depreciation
1,00,000 5,000
22 Plant) 23 A/c
01-Oct- To Bank A/c (New 01-Oct- By Bank A/c
50,000 40,000
22 Plant) 23 (Sale)
01-Oct-
By Loss on Sale 15,000
23
31-Mar-
By Balance c/d 50,000
24
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
Total 1,50,000 Total 1,50,000
Provision for Depreciation Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Oct- By Plant A/c 01-Apr-
15,000 To Balance b/d 12,500
23 (Old) 23
31-Mar- 31-Mar- To Depreciation
By Balance c/d 5,000 5,000
24 24 A/c
Total 20,000 Total 20,000
Question 17:
Given Data:
Opening Balances (1st April 2023):
o Machinery Account: ₹80,000
o Provision for Depreciation Account: ₹36,000
1st April 2023: Sold a machine for ₹8,700 (original cost ₹16,000,
purchased in April 2019).
Depreciation: 10% per annum (Straight Line Method).
Accounting year ends: 31st March.
Step 1: Calculate Depreciation
Machine purchased in April 2019 for ₹16,000:
o Depreciation per year: ₹16,000 × 10% = ₹1,600
o Depreciation for 4 years (2019-2023): ₹1,600 × 4 = ₹6,400
o Book Value as of 1st April 2023 = ₹16,000 - ₹6,400 = ₹9,600
Loss on Sale:
o Selling Price = ₹8,700
o Book Value = ₹9,600
o Loss = ₹9,600 - ₹8,700 = ₹900
Step 2: Record Transactions in Accounts
Machinery Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Apr- To Balance 01-Apr- By Provision for
80,000 6,400
23 b/d 23 Depreciation
01-Apr-
By Bank A/c (Sale) 8,700
23
01-Apr-
By Loss on Sale 900
23
Total 80,000 Total 80,000
Provision for Depreciation Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Apr- By Machinery A/c 01-Apr-
6,400 To Balance b/d 36,000
23 (Depreciation on sold asset) 23
To
31-Mar- 31-Mar-
By Balance c/d 29,600 Depreciation 29,600
24 24
A/c
Total 36,000 Total 36,000
Given Data:
Opening Balances (1st April 2023):
o Machinery Account: ₹5,00,000
o Provision for Depreciation Account: ₹2,25,000
Depreciation Method: 10% Fixed Installment Method
1st October 2023:
o Sold machinery purchased on 1st July 2020 for ₹1,00,000 for
₹42,000
o Purchased a new machine for ₹2,00,000
Accounting Year Ends: 31st March
Step 1: Calculate Depreciation
For machinery purchased on 1st July 2020 (₹1,00,000)
Depreciation per year: ₹1,00,000 × 10% = ₹10,000
Total depreciation (1st July 2020 – 31st March 2023):
o 3 years = ₹10,000 × 3 = ₹30,000
Depreciation for 2023-24 (before sale on 1st October 2023):
o 6 months depreciation = ₹10,000 × 6/12 = ₹5,000
Book Value before Sale: ₹1,00,000 - ₹35,000 = ₹65,000
Loss on Sale: ₹65,000 - ₹42,000 = ₹23,000
Step 2: Record in Accounts
Machinery Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Apr- 01-Oct- By Provision for
To Balance b/d 5,00,000 35,000
23 23 Depreciation A/c
01-Oct- To Bank A/c (New 01-Oct-
2,00,000 By Bank A/c (Sale) 42,000
23 Purchase) 23
01-Oct-
By Loss on Sale 23,000
23
31-Mar-
By Balance c/d 6,00,000
24
Total 7,00,000 Total 7,00,000
Provision for Depreciation Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Oct- By Machinery A/c 01-Apr-
35,000 To Balance b/d 2,25,000
23 (Depreciation on sold asset) 23
To
31-Mar- 31-Mar-
By Balance c/d 2,40,000 Depreciation 50,000
24 24
A/c
Total 2,75,000 Total 2,75,000
Question 19: Machinery and Depreciation Accounts
Given Data:
Opening Balances (1st April 2023):
o Machinery Account: ₹2,00,000
o Provision for Depreciation Account: ₹90,000
Depreciation Method: 10% Straight Line Method
1st October 2023:
o Sold machinery purchased on 1st July 2020 for ₹40,000 for
₹18,400
o Purchased a new plant for ₹1,00,000
Step 1: Calculate Depreciation
For machinery purchased on 1st July 2020 (₹40,000)
Depreciation per year: ₹40,000 × 10% = ₹4,000
Total depreciation (1st July 2020 – 31st March 2023):
o 3 years = ₹4,000 × 3 = ₹12,000
Depreciation for 2023-24 (before sale on 1st October 2023):
o 6 months depreciation = ₹4,000 × 6/12 = ₹2,000
Book Value before Sale: ₹40,000 - ₹14,000 = ₹26,000
Loss on Sale: ₹26,000 - ₹18,400 = ₹7,600
Step 2: Record in Accounts
Machinery Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Apr- 01-Oct- By Provision for
To Balance b/d 2,00,000 14,000
23 23 Depreciation A/c
01-Oct- To Bank A/c (New 01-Oct-
1,00,000 By Bank A/c (Sale) 18,400
23 Purchase) 23
01-Oct-
By Loss on Sale 7,600
23
31-Mar-
By Balance c/d 2,60,000
24
Total 3,00,000 Total 3,00,000
Provision for Depreciation Account
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
01-Oct- By Machinery A/c 14,000 01-Apr- To Balance b/d 90,000
Amount Amount
Date Particulars Date Particulars
(₹) (₹)
23 (Depreciation on sold asset) 23
To
31-Mar- 31-Mar-
By Balance c/d 1,02,000 Depreciation 26,000
24 24
A/c
Total 1,16,000 Total 1,16,000
Summary of Loss on Sale
Question 18: Loss on sale ₹23,000
Question 19: Loss on sale ₹7,600
