A Transport Company purchased 5 trucks at 2,00,000 each on April 1, 2007. The company observes calender year as its accounting year. On Octobenr 1, 2009 one of the trucks is involved in an accident and is completely destroyed. Insurance Company pays 90,000 in full settlement of the claim. On the same day the company purchases an used truck for 1,00,000 and spends 20,000 on its overhauling. Prepare Truck Account for the three years ending on December, 2010 if the company writes off depreciation @20% per annum on original cost method.
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Explanation:
1- Diminishing/Wdv Method Balance- ₹549200 Loss on sale- ₹25600
2- Fixed/Original cost/ Straight Line Method
Balance- ₹474000 Loss on sale 10000
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