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Depreciation 15.3

Solution:

Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `
2023 2023
April 1 To Balance b/d 8,00,000 April 1 By Bank A/c 2,00,000
By Provision for Depreciation A/c 90,000
By Loss on Sale of Machinery A/c 10,000
(Profit & Loss A/c) (Note)
2024
March 31 By Balance c/d 5,00,000
8,00,000 8,00,000

Dr. PROVISION FOR DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2023 2023
April 1 To Machinery A/c 90,000 April 1 By Balance b/d 3,20,000
2024 2024
March 31 To Balance c/d 2,80,000 March 31 By Depreciation A/c 50,000
(` 5,00,000 × 10/100)
3,70,000 3,70,000

Note: `
Actual value of machinery sold (1st April, 2020) 3,00,000

Less: Accumulated Depreciation since April, 2020 (` 30,000 × 3) 90,000
Book value on 1st April, 2023 2,10,000
Less: Sale proceeds 2,00,000
Loss on Sale of Machinery 10,000

2. A company, whose accounting year is the calendar year, purchased on 1st April,
2021 machinery costing ` 30,000.

It purchased further machinery on 1st October, 2021 costing ` 20,000 and on
1st July, 2022 costing ` 10,000.

On 1st January, 2023, one-third of the machinery installed on 1st April, 2021
became obsolete and was sold for ` 3,000.
Show the Machinery Account as it would appear in the books of the company, it
being given that machinery was depreciated by Fixed Instalment Method at 10% p.a.

What would be the value of Machinery Account on 1st January, 2024?