Question No 29 Chapter No 13

WDV Method and Partial Sale

29. On 1st April 2015, Ritu Chaudhry purchased machinery for Rs 10,000. she pent Rs 2,000 in its erection. On 1st October 2015, she purchased another machinery for Rs 4,000, on 1st April 2017 the machinery purchased on 1st April 2015 was sold Rs 4,600. Ritu Chaudhry writes of depreciation at 10% p.a. on the diminishing balance method.
Prepare machinery Account for three years ending 31st March 2018

The solution of Question No 29 Chapter No 13:-

 Dr. Machine A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 01/04/15 To Cash A/c 12,000 31/03/16 By Deprecation A/c*1 1,400 01/10/15 To Bank A/c 4,000 31/03/16 By Balance C/d 14,600 16,000 16,000 01/04/16 To Balance b/d 14,600 31/03/17 By Depreciation A/c*2 1,460 31/03/17 By Balance C/d 13,140 14,600 14,600 01/04/17 To Balance b/d 13,140 31/03/17 By Bank A/c 4,600 31/03/17 By Profit/Loss A/c 5,120 31/03/18 By Depreciation A/c*3 342 31/03/18 By Balance C/d 3,078 13,140 13,140

Working note:-

*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 12,000
Rate of Depreciation = 10%
Period = from 01/04/2015 to 31/03/2016 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 12,000 X 10/100 X 6/ 12
Depreciation = 1,200
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 4,000
Rate of Depreciation = 10%
Period = from 01/10/2017 to 31/03/2018 i.e. 6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 4,000 X 10/100 X 6/ 12
Depreciation = 200
Total Depreciation for the year = 1,400

*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,800
Rate of Depreciation = 10%
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)
= 10,800 X 10/100 X 12/ 12
Depreciation = 1,080
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,800
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 3,800 X 10/100 X 12/ 12
Depreciation = 380
Total Depreciation for the year = 1,460

 Statement Showing profit or loss on the sale of Machinery Particulars Amount Purchase value of machinery as on 1st April 2015 12,000 Less: – Amount of Depreciation charged on the year 2015-16 12,000 *10%* 12/12 1,200 Amount of Depreciation charged on the year 2016-17 10,800 *10%* 12/12 1,080 Book value of an asset as on 31st March 2019 9,720 Sale Price of Machinery 4,600 Profit on the sale of the asset 5,120

*3:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,420
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 the end of the financial year)
= 3,420 X 10/100 X 12/ 12
Depreciation = 342
Total Depreciation for the year = 342

Depreciation | Meaning | Methods | Examples

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

Chapter No. 1 – Introduction

Chapter No. 2 – Theory Base of Accounting

Chapter No. 3 – Vouchers and transactions

Chapter No. 4 – Journal

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

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)