Question No 18 Chapter No 12

Question No 18 Chapter No 12

18. A Company, which closes its books on 31st March every year, purchased on 1st July 2017, machinery costing 30,000. It purchased further machinery on 1st January 2018, costing 20,000, and on 1st October 2011, costing 10,000. On 1st April 2019, one-third of the machinery installed on 1st July 2019, became obsolete and was sold for 3,000.
Show how the machinery account would appear in the books of the Company, it is given that machinery was depreciated by Diminishing Balance Method at 10% per annum. What would be the balance of the Machinery Account on 1st April 2020?

The solution of Question No 18 Chapter No 12: –

Dr.Machinery A/cCr.
1st Jul.2017To Bank A/c (10,000+ 20,000) 30,00031st Mar 2018By Deprecation A/c(750+ 1,500 + 500) 2,750
1st Jan.2018To Bank A/c 20,00031st Mar 2018By Balance C/d  47,250
   50,000   50,000
1st Apr.2018To Balance b/f 47,25031st Mar 2019By Deprecation A/c (925 + 1,850 +1,950 + 500) 5,225
1st Oct.2018To Bank A/c 10,00031st Mar 2019By Balance C/d
   57,250   57,250
1st Apr.2019To Balance b/f 52,0251st Apr.2019By Bank A/c 3,000
    1st Apr.2019By Profit & Loss A/c 5,325
    31st Mar 2020By Deprecation A/c (1,665 + 1,755 + 950) 4,370
    31st Mar 2020By Balance C/d (7,290 + 29,160 + 25,650)  39,330

Working Note:
Calculation of Profit or Loss on Sale

Statement Showing profit or loss on the sale of Machinery
Machinery Purchase on of Equipment as on 1st Jul. 201710,000
Less: – Amount of Depreciation charged on the year 2017-18 
10,000 *10%* 12/12750
Amount of Depreciation charged on the year 2018-19 
9,250 *10%* 12/12925
Book value of an asset as of 1st Oct 20198,325
Sale Price of Machinery 3,000
Profit on the sale of the asset5,325

Note: In order to make easy calculation, machinery purchased on July 01, 2010 has been divided into two parts i.e. M1 and M2. Thus, M1: 1/3rd value i.e Rs 10,000 (sold for Rs 3,000) M2: 2/3rd value i.e. Rs 40,000 (remained in the business)

Depreciation | Meaning | Methods | Examples

Comment if you have any question.

Also, Check out the solved question of all Chapters: –

D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution

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ISC Accounts 11 20 Image min 197x300 - Question No 18 Chapter No 12 - D.K Goal 11 Class
D K Goel accountancy +1 – ISC_Accounts_11_20_ImageQuestion No 42 Chapter No 11 – D.K Goal 11 Class

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