3. In the books of Vandana Ltd. the
machinery account showed a debit
balance of Rs.1,20,000 as on april
1,2019 and Provision for depreciation
account at Rs.24,000. The Machinery
was sold on Dec31, 2019 for
Rs.56,000. The company charges
depreciation @ 20% p.a. on Straight
Line Method. Profit or Loss on sale of
the Machinery is Rs.
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Answer:
Balance in machinery account on 1.04.2013 = RS-1,20,000.
Depreciation for the year 2013-14 = RS-1,20,000 x 20/100
= Rs-24,000.
Depreciation for the year 2014-15 = (1,20,000 - 24,000) RS-96,000 X 20%
= RS-9,600. (April to September)
WDV on 30th September 2014 = 1,20,000 - 24,000 - 9,600
= RS-86,400.
Loss on the sale of asset = Sale value - WDV of asset
= RS-60,000 - RS-86,400
= Loss of RS-26,400.
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