On 1st January, 2020 a trader purchased a machine for Rs 18000 estimating that it had a working life of five years but no residual value at the end of that time. On 1st January 2021 he sold the machine for Rs 800 and on 1st July 2021 purchased another machine for Rs 12000 estimating its life at four yearS and its residual value at Rs 2400. Write up a Plant and Machinery Account for the two years mentioned, providing depreciation under straight line method.
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Calculation of Deprecation
2. Calculation of profit or loss on sale of Machine 1
Particulars
Amount
(Rs)
Book Value on April 01, 2016
2,25,000
Less: Deprecation for six month
(6,250)
Book Value on Oct. 01, 2016
2,18,750
Less: Sale Proceeds
(1,43,000)
Loss on Sale of Machine
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