Question No 30 Chapter No 14
30. A firm purchased on 1st April 2015 certain machinery for ₹ 5,82,000 and spent ₹ 18,000 on its installation. On 1st October 2015, additional machinery costing ₹ 2,00,000 was purchased. On 1st October 2017, the machinery purchased on 1st April 2015 was auctioned for ₹ 2,86,000 plus CGST and SGST @ 6% each and new machinery for ₹ 4,00,000, plus IGST @ 12% was purchased on the same date. Depreciation was provided annually on 31st March at the rate of 10% p.a. on the Written Down Value Method. Prepare the Machinery Account for the three years ended 31st March 2018.
The solution of Question No 30 Chapter No 14: –
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/15 | To Bank A/c | 6,00,000 | 31/03/16 | By Deprecation A/c*1 | 70,000 | ||
| 01/10/15 | To Bank A/c | 2,00,000 | 31/03/16 | By Balance C/d | 7,30,000 | ||
| 8,00,000 | 8,00,000 | ||||||
| 01/04/16 | To Balance b/d | 7,30,000 | 31/03/17 | By Deprecation A/c*2 | 42,500 | ||
| 31/03/17 | By Balance C/d | 6,57,000 | |||||
| 7,30,000 | 7,30,000 | ||||||
| 01/04/17 | To Balance b/d | 6,57,000 | 01/10/17 | By Deprecation A/c | 24,300 | ||
| 01/10/17 | To Bank A/c | 4,00,000 | 01/10/17 | By Bank A/c | 2,86,000 | ||
| 01/10/17 | By Loss on sale of Machine A/c | 1,75,700 | |||||
| 31/03/18 | By Deprecation A/c*3 | 37,100 | |||||
| 31/03/18 | By Balance C/d | 5,33,900 | |||||
| 10,57,000 |
10,57,000 | ||||||
Working Note:-`
*1:– Calculation of the amount of Depreciation on Machine for the year 2015-16
Purchased on 1st April 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 6,00,000
Rate of Depreciation = 10%
Period = from 01/04/2015 to 31/03/2016 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=6,00,000 X10/100 X 12/12
Depreciation =60,000
Purchased on 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10%
Period = from 01/10/2015 to 31/03/2016 i.e.6months
(from the date of purchase/Beginning balance to the end of the financial year)
=2,00,000 X10/100 X 12/12
Depreciation = 10,000
Total Depreciation for the year = 70,000
*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Purchased on 1st April,2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,40,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=5,40,000 X10/100 X 12/12
Depreciation = 54,000
Purchased on 1st October,2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,90,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=1,90,000 X10/100 X 12/12
Depreciation = 19,000
Total Depreciation for the year = 73,000
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st April 2015 | 6,00,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 6,00,000*10%*12/12 | 60,000 |
| Amount of Depreciation charged on the year 2016-17 | |
| 5,40,000*10%*12/12 | 54,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 4,86,000*10%*6/12 | 24,300 |
| Book value of the asset as on 1st March 2017 | 4,61,700 |
| Sale Price of Machinery | 2,86,000 |
| Loss on the sale of the asset | 1,75,700 |
*3:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Purchased on 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,71,000
Rate of Depreciation = 10%
Period = from 01/04/2010 to 31/03/2011 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=1,71,000 X10/100 X 12/12
Depreciation = 17,100
Purchased on 1st October 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 4,00,000
Rate of Depreciation = 10%
Period = from 01/10/2017 to 31/03/2018 i.e.6months
(from the date of purchase/Beginning balance to the end of the financial year)
=4,00,000 X10/100 X 6/12
Depreciation = 20,000
Total Depreciation for the year = 37,100
Depreciation | Meaning | Methods | Examples
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Also, Check out the solved question of previous Chapters: –
- Chapter No. 1 – Introduction to Accounting
- Chapter No. 2 – Basic Accounting Terms
- Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
- Chapter No. 4 – Bases of Accounting
- Chapter No. 5 – Accounting Equation
- Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
- Goods and Services Tax(GST)
- Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
- Chapter No. 8 – Journal
- Chapter No. 9 – Ledger
- Chapter No. 10 – Special Purpose Books I – Cash Book
- Chapter No. 11 – Special Purpose Books II – Other Books
- Chapter No. 12 – Bank Reconciliation Statement
- Chapter No. 13 – Trial Balance
- Chapter No. 14 – Depreciation
- Chapter No. 15 – Provisions and Reserves
- Chapter No. 16 – Accounting for Bills of Exchange
- Chapter No. 17 – Rectification of Errors
- Chapter No. 18 – Financial Statements of Sole Proprietorship
- Chapter No. 19 – Adjustments in preparation of Financial Statements
- Chapter No. 20 – Accounts from incomplete Records – Single Entry System
- Chapter No. 21 – Computers in Accounting
- Chapter No. 22 – Accounting Software – Tally
- Chapter No. 5 – Accounting Equation
- Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
- Goods and Services Tax(GST)
- Chapter No. 8 – Journal
- Chapter No. 9 – Ledger
- Chapter No. 10 – Special Purpose Books I – Cash Book
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