Question

Z limited purchased machinery worth 700000 on 1 April 2017 Depreciation charged@10% The machinery was sold on 2020 December 31 The cost of the machinery sold is 530000 Prepare machinery account and Depreciation account


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Answer 1

Answer:

Explanation:

FIRST YEAR DEPRECIATION = 7,00,000 × 10% = 70,000

SECOND YEAR DEPRECIATION = 7,00,000 - 70,000 = 6,30,000

   6,30,000 × 10% = 63,000

THIRD YEAR DEPRECIATION = 6,30,000 - 63,000 = 5,10,300

FOURTH YEAR DEPRECIATION = 5,10,000 × 10% × 9/12

CALCULATION OF PROFIT ON SALE

ORIGINAL VALUE = 7,00,000

1'ST YEAR DEP      = 70,000

BALANCE              = 6,30,000

2'ND YEAR DEP    = 63,000

BALANCE               = 5,67,000

3'RD YEAR DEP     = 56,700

BALANCE              = 5,10,300

4'TH YEAR DEP 9 MNTHS = 38,273

- SALE VALUE        = 5,30,000

PROFIT                 = 58,273