Question No 33 Chapter No 13

Question No 33 Chapter No 13

WDV Method and Partial Sale

33. Sunrise Ltd. Had purchased machinery on 1st April, 2016 for Rs 5,00,000. on 1st April 2018, the company sold a part of machinery bought on 1st April, 2016 costing Rs 1,00,000 for Rs 80,000 and selling expenses amounting to Rs 2,000. Subsequently, on 1st October, in the same year, the company bought new machinery for Rs 58,000. installation charges incurred were Rs 2,000. the company depreciation @10% per annum on Diminishing Balance Method and the accounts are closed on 31st March each year Show the machinery account are closed for the period of 2016-17 to 2018-19

The solution of Question No 33 Chapter No 13:-  

Dr.Machinery A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
01/04/16To Bank A/c 5,00,00031/03/17By Deprecation A/c*1 50,000
    31/03/17By Balance C/d 4,50,000
   5,00,000   5,00,000
01/04/17To Balance b/d 4,50,00031/03/18By Depreciation A/c*2 45,000
    31/03/18By Balance C/d 4,05,000
   4,50,000   4,50,000
01/04/18To Balance b/d 4,05,00001/04/18By Bank A/c 78,000
01/10/18To Bank A/c 60,00001/04/18By Profit/Loss A/c 3,000
    31/03/18By Depreciation A/c*3 35,400
    31/03/18By Balance C/d 3,48,600
   4,65,000   4,65,000


Working note:-

*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st April 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,00,000
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)
= 5,00,000 X 10/100 X 9/ 12
Depreciation = 50,000
Total Depreciation for the year = 50,000

*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 = 4,50,000
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)
= 4,50,000 X 10/100 X 12/ 12
Depreciation = 45,000
Total Depreciation for the year = 45,000

Statement Showing profit or loss on the sale of Machinery 
Particulars
Amount
Purchase value of machinery as on 1st July, 20161,00,000
Less: – Amount of Depreciation charged on the year 2016-17 
1,00,000 *10%* 12/1210,000
 Amount of Depreciation charged on year 2017-18 
18,500 *10%* 12/129,000
Book value of the asset as on 1st April 201881,000
Add: – Selling expenses2,000
Sale Price of Machinery 80,000
Profit on the sale of the asset3,000

*3:- Calculation of the amount of Depreciation on furniture for the year 2018-19
Machinery purchased on 1st April 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,24,000
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)
= 3,24,000 X 10/100 X 12/ 12
Depreciation = 32,400
Machinery purchased on 1st Oct 2018
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/10/2018 to 31/03/2019 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 60,000 X 10/100 X 6/ 12
Depreciation = 3,000
Total Depreciation for the year = 3,000

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)

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