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Question No 14 Chapter No 13
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Sale of Total Assets
14. Parshant Kishore purchased a plant for Rs 6,00,000 on 1st April 2016. The addition was made in the plant on 1st July 2017 for Rs 3,00,000. On 1st January 2019, one –third of the plant purchased on 1st April,2017 was sold for Rs 1,40,000
Prepare the plant Account and Depreciation account for the years 2016-17 to 2018-19, when depreciation was charged @20%p.a. on Straight-line basis and books are closed on 31st March every year.
The solution of Question No 14 Chapter No 13:-
| Dr. | Plant A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/04/16 | To Cash A/c | 6,00,000 | 31/03/17 | By Deprecation A/c*1 | 1,20,000 | ||
| 31/03/17 | By Balance C/d | 4,80,000 | |||||
| 6,00,000 | 6,00,000 | ||||||
| 01/04/17 | To Balance b/d | 4,80,000 | 31/03/18 | By Deprecation A/c*2 | 1,65,000 | ||
| 01/07/17 | To Cash A/c | 3,00,000 | 31/03/18 | By Balance C/d | 6,15,000 | ||
| 7,80,000 | 7,80,000 | ||||||
| 01/04/18 | To Balance b/d | 6,15,000 | 01/01/19 | By Deprecation A/c | 30,000 | ||
| 01/01/19 | To Profit on sale of Machinery | 50,000 | 01/01/19 | By Sale A/c | 1,40,000 | ||
| 31/03/19 | By Deprecation A/c*3 | 1,40,000 | |||||
| 31/03/19 | By Balance C/d | 3,55,000 | |||||
| 6,65,000 | 6,65,000 | ||||||
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Working note:-
*1:- Calculation of amount of Depreciation on furniture for year 2016-17
Machinery purchased on 1st April 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 6,00,000
Rate of Depreciation = 20%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 6,00,000 X 20/100 X 12 / 12
Depreciation = 1,20,000
Total Depreciation for the year = 1,20,000
*2:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st April 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 6,00,000
Rate of Depreciation = 20%
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)
= 6,00,000 X 10/100 X 3 / 12
Depreciation = 1,20,000
Machinery purchased on 1st July 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,00,000
Rate of Depreciation = 20%
Period = from 01/07/2017 to 31/03/2018 i.e. 9 months
(from the date of purchase/Beginning balance to end of the financial year)
= 3,00,000 X 20/100 X 9/ 12
Depreciation = 45,000
Total Depreciation for the year 1,65,000
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars | Amount |
| Purchase value of machinery as on 1st April 2016 1/3 | 2,00,000 |
| Less: – Amount of Depreciation charged on the year 2016-17 | |
| 2,00,0000*20%* 12/12 | 40,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 2,00,0000*20%* 12/12 | 40,000 |
| Amount of Depreciation charged on the year 2018-19 | |
| 2,00,000*20%*9/12 | 30,000 |
| Book value of the asset as on 1st January 2019 | 90,000 |
| Sale Price of Machinery | 1,40,000 |
| Profit on the sale of the asset | 50,000 |
*3:- Calculation of amount of Depreciation on furniture for year 2017-18
Machinery purchased on 1st April 2016 ½ left
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 4,00,000
Rate of Depreciation = 20%
Period = from 01/04/2018 to 31/10/2019 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 4,00,000 X 20/100 X 12/ 12
Depreciation = 80,000
Machinery purchased on 1st July 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,00,000
Rate of Depreciation = 20%
Period = from 01/04/2018 to 31/03/2019 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 3,00,000 X 20/100 X 12/ 12
Depreciation = 60,000
Total Depreciation for the year = 1,40,000
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
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Chapter No. 5 – Ledger
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
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Chapter No. 11 – Depreciation
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)