Question

A company purchased machinery costing Rs. 2,00,000 which included a Boiler costing
Rs. 20,000. Depreciation has been written off the machinery account on reducing balance
method for the last 4 years at the rate of 10%. During the current year (fifth) the Boiler
became useless and was sold for Rs. 4,000. Write up machinery account for five years.
[Ans. Loss on sale Rs. 9,122, Balance of machine A/c Rs. 1,06,298-20.]​

Answer 1

Answer:

Calculation of Loss on Sale of Boiler:

₹

On of Boiler

20,000

Less: Depreciation for 4 years (Rs 2,000+ Rs 1,800 + Rs 1,620 + Rs 1,458)

6,878

Book value in the beginning of 5th year

13,122

Less: Sale proceeds

4,000

Loss on Sale of Boiler

9,122