Question

On January 1,2013 a trader bought a Machinery for Rs.1,00,000. The useful life of this Machinery was 10 years and scrap value is Rs.10,000. On September, 2014 another Machinery was purchased for Rs. 80,000 with a useful life of 8 years and scrap value of Rs. 8,000. On July 1,2015 He bought another Machinery for Rs.50,000 with a useful life of 3 years and a scrap value of Rs.5,000. Depreciation is charged on Straight Line Method. Prepare Machinery a/c upto December 31, 2016.

Answer 1

Answer:

Correct option is B)

Profit/loss on sale = Sale price - WDV of the machine

= RS-60,000 - RS-55,000

= RS-5,000.

Working note:-

WDV of the machine = cost - depreciation on machine for 5 years

= 1,10,000 - (1,10,000 x 10/100 x 5 years)

= 1,10,000 - 55,000

= RS-55,000