Question No 34 Chapter No 12

Question No 34 Chapter No 12

34. On 1st Jan. 2017, Panjim Dryfruits Ltd. bought a plant for 15,00,000. The company writes off depreciation @ 20% p.a. on Written Down Value Method and closes its books on 31st March every year. On 1st Oct. 2019, a part of the plant purchased on 1st Jan. 2020 for 3,00,000 was sold for 1,75,000. On 1st Jan. 2020 a fresh plant was purchased for 5,00,000. Prepare Plant A/c, Provision for Dep. A/c and Plant Disposal A/c.

The solution of Question No 34 Chapter No 12: –

Dr.Plant A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1st Jan.2017To Bank A/c (3,00,000 + 12,00,000) 15,00,000    
    31st Mar 2017By Balance C/d  15,00,000
   15,00,000   15,00,000
1st Apr.2017To Balance b/f 15,00,000    
    31st Mar 2018By Balance C/d  15,00,000
   15,00,000
   15,00,000
1st Apr.2018To Balance b/f 15,00,000    
    31st Mar 2019
By Balance C/d
 15,00,000
   15,00,000   15,00,000
1st Apr.2019To Balance b/f 15,00,00031st Oct 2019By Plant Disposal A/c 3,00,000
1st Jan.2020To Bank A/c 5,00,000    
    31st Mar 2020
By Balance C/d
 17,00,000
   20,00,000
   20,00,000
Dr.Plant Disposal A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1st Oct 2019To Plant A/c 3,00,0001st Oct 2020By Provision for Depreciation A/c 1,35,840
1st Oct 2020To Profit & Loss A/c 10,8401st Oct 2020By Bank A/c (Sale) 1,75,000
   3,10,840   3,10,840
Dr.Provision for Depreciation  A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
    31st Mar 2018By Depreciation A/c (15,000 + 60,000) 75,000
31stMar.2018Balance c/d 75,000    
   75,000   75,000
    31st Apr 2018By Balance b/d 75,000
31st Mar.2018Balance c/d 3,60,00031st Mar 2018By Depreciation A/c (57,000 + 2,28,000) 2,85,000
   3,60,000   3,60,000
    31st Apr 2018By Balance b/d 3,60,000
31stMar.2019Balance c/d 5,88,000
31st Mar 2019
By Depreciation A/c (45,600 + 1,8,2,400)
 2,28,000
   5,88,000
   5,88,000
31stOct.2019To Machine Disposal A/c 1,35,84031st Apr 2019By Balance b/d 5,88,000
    1st Oct 2019By Depreciation A/c (6 Months) 18,240
31stMar.2020To Balance b/f 6,41,230
31st Mar.2019By Depreciation A/c (1,45,920 + 25,000) 1,70,920
   7,77,160   7,77,160

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. 20173,00,000
Less: – Amount of Depreciation charged on the year 2017-18 
3,00,000 *20%* 3/1215,000
Amount of Depreciation charged on the year 2017-18 
2,85,000 *20%* 12/1257,000
Amount of Depreciation charged on the year 2018-19 
2,28,000 *20%* 12/1245,600
Amount of Depreciation charged on the year 2019-20 
1,82,400 *20%* 3/1218,240
Book value of asset as of 1st Oct 20191,64,160
Sale Price of Machinery 1,75,000
Profit on the sale of the asset10,840

Note: In order to make easy calculation, the plant purchased on Jan 01, 2012, has been divided into two parts i.e.
P1 and P2. Thus,
P1: Rs 3,00,000 (sold for Rs 1,75,000 on Oct. 01, 2014)
P2: Rs 12,00,000

Depreciation | Meaning | Methods | Examples

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