Question No 33 Chapter No 12

Question No 33 Chapter No 12

33. On 1st June, 2017, Kedarnath Ltd. purchased a machinery for 27,00,000. Depreciation is provided @ 10% p.a. on diminishing balance method and the books are closed on 31st March each year. On 1st October, 2019, a part of the machinery purchased on 1st June, 2017 for 6,00,000 was sold for 3,50,000 and on the same date another machinery was purchased for 8,00,000. You are required to show (i) Machinery A/c, (ii) Provision for Dep. A/c, and (iii) Machinery Disposal A/c.

The solution of Question No 33 Chapter No 12: –

Dr.Plant A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1st Jun.2017To Bank A/c (6,00,000 + 21,00,000) 27,00,000    
    31st Mar 2018By Balance C/d  27,00,000
   27,00,000   27,00,000
1st Apr.2018To Balance b/f 27,00,000    
    31st Mar 2019
By Balance C/d
 27,00,000
   27,00,000   27,00,000
1st Apr.2019To Balance b/f 27,00,00031st Oct 2019By Plant Disposal A/c 6,00,000
1st Oct.2019To Bank A/c 8,00,000    
    31st Mar 2020
By Balance C/d
 29,00,000
   35,00,000
   35,00,000
Dr.Machinery Disposal A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1st Oct 2019To Machinery A/c 6,00,0001st Oct 2019By Provision for Depreciation A/c 1,29,750
    1st Oct 2019By Bank A/c (Sale) 3,50,000
    1st Oct 2019By Profit & Loss A/c 1,20,250
   6,00,000   6,00,000
Dr.Provision for Depreciation  A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
    31st Mar 2018By Depreciation A/c (50,000 + 1,75,000) 2,25,000
31stMar.2017Balance c/d 2,25,000    
   2,25,000   2,25,000
    31st Apr 2018By Balance b/d 2,25,000
31st Mar.2018Balance c/d 4,72,50031st Mar 2018By Depreciation A/c (55,000 + 1,92,500) 2,47,500
   4,72,500   4,72,500
31stOct.2019To Plant A/c (13,500 + 18,000 +19,000) 1,29,75031st Apr 2018By Balance b/d 4,72,500
    1st Oct 2018By Depreciation A/c (6 Months) 24,750
31stMar.2020To Balance b/f 5,80,750
31st Mar.2019By Depreciation A/c (1,02,000 + 42,000 + 10,000) 2,13,250
   7,10,500
   7,10,500

Working Note:
Calculation of Profit or Loss on Sale M1

Statement Showing the Profit and loss on the sale of Plant
Particulars
Amount
Machinery Purchase on of Equipment as on 1st Jun. 20176,00,000
Less: – Amount of Depreciation charged on the year 2017-18 
6,00,000 *10%* 10/1250,0000
Amount of Depreciation charged on the year 2018-19 
5,50,000 *10%* 12/1255,000
Amount of Depreciation charged on the year 2019-20 
4,95,000 *10%* 6/1224,750
Book value of asset as on 1st Oct, 20194,70,250
Sale Price of Machinery 3,50,000
Loss on the sale of the asset1,20,250

Note: In order to make an easy calculation, machinery purchased on June 01, 2010, has been divided into two parts i.e. M1 and M2.
Thus, M1: Rs 6,00,000 (sold for Rs 3,50,000 on Oct. 01, 2012)
M2: Rs 21,00,000

Depreciation | Meaning | Methods | Examples

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

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