Page 116 - debkxi

Depreciation 15.11

3. Calculation of depreciation on remaining machinery:
Book Value of machinery on 1st January, 2023 (cost) 9,82,000
Less: Cost of machine sold 3,88,000
Book Value of machinery (remaining) on 1st January, 2023 (at cost) 5,94,000
Provision for Depreciation Account balance on 1st January, 2023 2,76,000
Less: Total depreciation of the machine sold up to 1st January, 2023
(` 29,100 + ` 35,890) 64,990
Total depreciation of the remaining machinery up to 1st January, 2023 2,11,010
Book Value of remaining machinery (at cost) on 1st January, 2023 5,94,000
Less: Total Depreciation up to 1st January, 2023 charged 2,11,010
Written down value on 1st January, 2023 3,82,990
Depreciation on ` 3,82,990 for full year @ 10% p.a. 38,299
Depreciation on ` 3,50,000 for 7 months @ 10% p.a. 20,417
Total depreciation 58,716

8. On 1st April, 2023, the Machinery Account and Provision for Depreciation Account
of Mr. Akash Agarwal shows a balance of ` 94,000 and ` 37,400 respectively. On
31st July, 2023, a machine costing ` 56,000 was purchased and paid for its freight
and installation ` 12,000. On 31st December, 2023, an old machine was sold at
` 23,600, which was installed on 1st September, 2021, at a cost of ` 45,000.
Depreciation is charged @ 10% p.a. on the Diminishing Balance Method. Show
the Machinery Account, Provision for Depreciation Account, Machinery Disposal
Account and Depreciation Account for the year ended 31st March, 2024. Also, show
position of the Machinery Account in the Balance Sheet.
Solution:
Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `

2023 2023
April 1 To Balance b/d 94,000 Dec. 31 By Machinery Disposal A/c 45,000
July 31 To Bank A/c 56,000 2024
To Cash A/c 12,000 March 31 By Balance c/d 1,17,000
(Freight and Installation)
1,62,000 1,62,000

Dr. DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2023 2024
Dec. 31 To Provision for Depreciation A/c 2,860 March 31 By Profit & Loss A/c 9,239
2024 —transferred
March 31 To Provision for Depreciation A/c 6,379
9,239 9,239