Question

Vinod Ltd., purchased a Plant on 1st April, 2005 for `15,000. It purchased another plant on 1st
October, 2005 costing `20,000 and on 1st July, 2006 costing `30,000. On 1st January, 2007 the
Plant purchased on 1st April, 2005 became useless and was sold for `2,000. Show Plant
Account charging 10% p.a. depreciation by fixed instalment method for four years. The plant
purchased on 1st October, 2005 was sold for `8,000 on 1st January, 2008. Accounts of the
company are closed on 31st December each year

Answer 1

The Total depreciation is 7,500 of the given question.

Explanation:

• The first purchase was made on 1st April 2005 = 15,000
• While depreciation on plant was 1500
• Hence from April to December 2005 is 1,125
• While from January to December is 1,500
• Total depreciation we get is 2,625
• 200 plants were sold on 1st Jan 2007 and 15000 were sold on April.
• 15000 - 2625= 12,375
• Similarly, the total depreciation during sales in 2006 and 2007 are = 4,500
• The plants sold during 1st Jan 2008 are 8,000
• While the were charged for 20,000  in 2005's October 20,000 - 4500 = 15,500
• Hence loss on sale = 7500
• Depreciation in July 2008 is 3000
• During different years of 2006, 2007, 2008's depreciation is = 1500 , 3000, 3000.

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