Question

[10 marks]
Question 5
Shri Hanuman Ltd. purchased a machine for RM 75,000 on 1st January, 2019. Another machine
was purchased on 1st July, 2019 for RM 10,000. On 1st January, 2020, the first machine was
sold for RM 15.000. Depreciation has been charged @ 15% on original cost to profit and loss
Account and credited to Depreciation Provision Account
Show:
(a) Machinery Account
(b) Provision for Depreciation Account
(c) Machinery Disposal Account
​

Answer 1

Provision for Depreciation & Asset Disposal Account

Explanation:

         Working notes:

(i) Depreciation on machinery for 31 December, 2020

on 1st machine for full year                     11,250

on 2nd machine for six months                750

                                                                12,000

(ii) Gain or Loss on disposal of machinery

Cost price of machinery                                    75,000      

Less: Depreciation for 1 year @ 15%                 (11,250)

Written Down Value of machine on the           63,750

               date of disposal

Less: sale proceeds                                          (15,000)

Loss on disposal of machinery                          48,750

Pls refer to the attached pics for the following accounts