D Question 1 :
You are given the following
balances as on April 1, 2015:
machinery account 500000
provision for depreciation account
116000.
Depreciation is charged on
machinery at 20% per annum by
the diminishing balance method. A
piece of machinery purchased on
April 1, 2013 for 100000 was sold
on October 1, 2015 for 60000.
Prepare the machinery account,
provision for depreciation account
for the year ending 31st March
2016. Also prepare machinery
disposal account.
Answers
Preparation of machinery account, provision for depreciation account and machinery disposal account.
Explanation:
Working Notes-
1. Calculation of Profit or Loss on Sale:
Value of M1 as on Apr. 01, 2005 64,000
Less: Depreciation for 6 months (6,400)
Value of M1 as on Mar. 01, 2012 57,600
Less: Sale Value (60,000)
Profit on Sale 2,400
2. Depreciation on the machinery sold:
Book value of the machine as on 1st April 2003 = Rs 1, 00,000
Less: Depreciation for 2003-2004 = Rs (20,000)
Book value on 1st April 2004 = Rs 80,000
Less: Depreciation for 2004-2005 = Rs (16,000)
Book value on 1st April 2005 = Rs 64,000
Less: Depreciation for 6 months = Rs 6,400
Book value on 1st October 2005 = Rs 57,600
3. Depreciation provided on the remaining machinery
= Rs 1, 16,000- Rs 20,000- Rs 16,000
= Rs 80,000
Cost of the machine = Rs 4, 00,000
Less: Depreciation =Rs (80,000)
Book value of machine = Rs 3, 20,000
Depreciation on the existing machine for this year
= Rs 3, 20,000 x
= Rs 64,000
Pls refer to the attached pic below
