Page 114 - debkxi

Depreciation 15.9

Dr. PROVISION FOR DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2023 2023
Oct. 1 To Machinery Disposal A/c 42,400 April 1 By Balance b/d 1,16,000
(WN 1) Oct. 1 By Depreciation A/c (WN 1) 6,400
2024 2024
March 31 To Balance c/d 1,44,000 March 31 By Depreciation A/c (WN 2) 64,000
1,86,400 1,86,400
2024
April 1 By Balance b/d 1,44,000

Dr. MACHINERY DISPOSAL ACCOUNT Cr.
Date Particulars ` Date Particulars `
2023 2023
Oct. 1 To Machinery A/c 1,00,000 Oct. 1 By Bank A/c 60,000
Oct. 1 To Gain (Profit) on Sale of Oct. 1 By Provision for
Machinery A/c (Bal. Fig.) 2,400 Depreciation A/c 42,400
(Profit & Loss A/c)
1,02,400 1,02,400

Working Notes:
1. Depreciation provided on Machinery sold till 1st October, 2023:
`
For 2021–2022 20,000
 20 
For 2022–2023   ( 1,00,000 ` 20,000) ` 100   16,000
 20 6 
For 2023–2024  ( 1,00,000 ` ` 20,000  ` 16,000)   6,400
 100 12  42,400
2. Calculation of Depreciation provided for 2023–24:
Balance of Provision for Depreciation on 1st April, 2023 1,16,000
Add: Depreciation provided on Machinery sold 6,400
1,22,400
Less: Accumulated Depreciation on Machinery sold (WN 1) 42,400
Depreciation on the remaining Machinery 80,000
Cost of remaining Machinery (` 5,00,000 – ` 1,00,000) 4,00,000
Less: Depreciation on remaining Machinery (As above) 80,000
3,20,000
Depreciation provided during 2023–24 = ` 3,20,000 × 20/100 = ` 64,000.

7. M Ltd., which depreciates its machinery at 10% p.a. according to Diminishing
Balance Method, had balance on 1st January, 2023 of ` 9,82,000 (cost) in its
Machinery Account and balance of ` 2,76,000 in Provision for Depreciation Account.
On 1st June, 2023, a new machine was purchased at ` 3,20,000 and paid ` 30,000
for its carriage and installation. The machine started functioning from 1st June, 2023.
On 1st July, 2023, an old machinery was sold at ` 2,15,000 which was installed on
1st April, 2021 costing ` 3,88,000.
Show Machinery Account, Provision for Depreciation Account and Machinery
Disposal Account for the year ended 31st December, 2023.