Q29. On 1st June 2009, S Itd purchased a plant for Rs 900000. On 1st December 2011 a part of the plant
purchased on 1st June 2009 for Rs 150000 was sold for Rs 60000. On 1st January 2012 a new plant was
purchased for Rs 300000. Depreciation is provided @ 10% pa on diminishing balance method. The books
are closed on 31st March each year. Prepare plant account and provision for depreciation account for
the relevant years.
(6)
Answers
Balance in 'Provision for depreciation Account" as of 31.03.2015 will be as Rs.3,40,000
GIVEN: On 1st June 2009, S Ltd. purchased a plant for Rs 900000. On 1st December 2011, a part of the plant purchased on 1st June 2009 for Rs 150000 was sold for Rs 60000. On 1st January 2012, a new plant was purchased for Rs 300000. Depreciation is provided @ 10% pa on the diminishing balance method. The books are closed on 31st March each year.
TO FIND: Balance in 'Provision for depreciation Account"
SOLUTION:
As we are given in the question,
S It purchased a plant for Rs 900000. On 1st December 2011, a part of the plant purchased on 1st June 2009 for Rs 150000 was sold for Rs 60000. On 1st January 2012, a new plant was purchased for Rs 300000.
Balance in 'Provision for depreciation Account" as of 31.03.2015:-
= depreciation on unsold machinery + Depreciation on new machinery
= RS- 3,36,000 + RS-4,000
RS-3,40,000.
Working notes:-
1) Depreciation on existing machinery from 1.4.2012 to 31.03.2015 (3 years):-
= (12,00,000 - 80,000) 11,20,000 x 10/100 x 3 years
= RS-3,36,000
2) Depreciation on new machinery from 1.10.2014 to 31.03.2015 (6 months)
= 80,000 x 10/100 x 6/12
= RS-4,000.
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