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M.380 An Aid to Accountancy—CBSE XII

2. Dr. ACCUMULATED DEPRECIATION ACCOUNT Cr.
Particulars ` Particulars `
To Machinery A/c (Transfer) 15,000 By Balance b/d 50,000
To Balance c/d 60,000 By Statement of Profit and Loss (Bal. Fig.) 25,000
75,000 75,000

3. Dr. NON-CURRENT INVESTMENTS ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 50,000 By Bank A/c (Sales)* 12,000
To Capital Reserve A/c (Profit)* 2,000 By Balance c/d 40,000
52,000 52,000

*Calculation of ‘Sale Value’ and ‘Profit on sale of Non-Current Investments (NCI):
Book Value = Opening – Closing = ` 50,000 – ` 40,000 = ` 10,000.
Profit on Sale = 20% × ` 10,000 = ` 2,000.
Sale value of Non-Current Investments = Book value + Profit = ` 10,000 + ` 2,000 = ` 12,000.
As the profit of Non-Current Investments has been transferred to Capital Reserve and not to Statement of Profit and
Loss, such profit will not be adjusted while calculating Operating Profit before Working Capital Changes.

4. Share issue expenses have been written off from Securities Premium Reserve, therefore, these expenses are
not considered while computing Operating Profit before Working Capital Changes.