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Question No 11 Chapter No 13
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Sale of Total Assets
11. Balwant Gargi purchased one building at a cost of Rs 12,00,000 on 1st July 2016. the building was depreciated @10% p.a. on fixed instalment method. On 31st March 2019, the building was sold for Rs 17,00,000
Prepare Machinery Account for the first four years, when books are closed on 31st March every year.
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The solution of Question No 11 Chapter No 13:-
| Dr. | Building A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/07/16 | To Cash A/c | 12,00,000 | 31/03/17 | By Deprecation A/c*1 | 90,000 | ||
| 31/03/17 | By Balance C/d | 11,10,000 | |||||
| 12,00,000 | 12,00,000 | ||||||
| 01/03/17 | To Balance b/d | 11,10,000 | 31/03/18 | By Deprecation A/c*2 | 1,20,000 | ||
| 31/03/18 | By Balance C/d | 9,90,000 | |||||
| 11,10,000 | 11,10,000 | ||||||
| 01/03/18 | To Balance b/d | 9,90,000 | 31/03/19 | By Deprecation A/c*3 | 19,000 | ||
| 01/31/19 | To Profit on sale o machinery | 8,30,000 | 31/03/19 | By Balance C/d | 1,73,500 | ||
| 18,20,000 | 18,20,000 | ||||||
| 31/03/18 | By Deprecation A/c*4 | 1,20,000 | |||||
| 31/03/19 | By Sale A/c | 17,00,000 | |||||
| 18,20,000 | |||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 12,00,000
Rate of Depreciation = 10%
Period = from 01/07/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 12,00,000 X 10/100 X 9 / 12
Depreciation = 90,000
Total Depreciation for the year = 90,000
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*2:- Calculation of amount of Depreciation on furniture for year 2017-18
Machinery purchased on 1st July 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 12,00,000
Rate of Depreciation = 10%
Period = from 01/04/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 12,00,000 X10/100 X 12 / 12
Depreciation = 1,20,000
Total Depreciation for the year = 1,20,000
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars | Amount |
| Purchase value of machinery as on 1st July 2016 | 12,00,000 |
| Less: – Amount of Depreciation charged on the year 2016-17 | |
| 12,00,000*10%*9/12 | 90,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 12,00,000*10%*12/12 | 1,20,000 |
| Amount of Depreciation charged on year 2018-19 | |
| 12,00,000*10%*12/12 | 1,20,000 |
| Book value of an asset as on 31st March 2019 | 8,70,000 |
| Sale Price of Machinery | 17,00,000 |
| Profit on the sale of the asset | 8,30,000 |
Depreciation | Meaning | Methods | Examples
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Also, Check out the solved question of all Chapters: –
Chapter No. 2 – Theory Base of Accounting
Chapter No. 3 – Vouchers and transactions
Chapter No. 4 – Journal
Chapter No. 5 – Ledger
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Chapter No. 6 – Cash Book
Chapter No. 7 – Other Subsidiary Books
Chapter No. 8 – Journal Proper
Chapter No. 9 – Trial Balance
Chapter No. 10 – Bank Reconciliation Statement
Chapter No. 11 – Depreciation
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Chapter No. 12 – Provisions and Reserves
Chapter No. 13 – Bills of Exchange
Chapter No. 14 – Rectification of Errors
Chapter No. 15 – Financial Statements – (Without Adjustments)
Chapter No. 16 – Financial Statements – (With Adjustments)
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