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Depreciation                                                                  15.13

                      9.  A  firm  charged  depreciation  @  20%  p.a.  on  written  down  value.  Machinery
                        costing ` 1,00,000, ` 40,000 and ` 30,000 were purchased on 1st January, 2020,
                        1st July, 2021 and 1st October, 2022 respectively. On 1st October, 2023, machinery
                        purchased on 1st July, 2021 was damaged and replaced by a new machine
                        costing ` 50,000. The damaged machinery was insured and an insurance claim of
                        ` 24,800 (after adjustment of value of scrap) was admitted by the Insurance Co.
                        The scrap was sold for ` 2,200.
                         Show Machinery Account, Accumulated Depreciation Account and Machinery
                        Disposal Account for the year 2023.

                     Solution:
                     Dr.                             MACHINERY ACCOUNT                                Cr.
                     Date     Particulars                `     Date     Particulars                `
                     2023                                       2023
                     Jan.   1  To  Balance b/d         1,70,000   Oct.   1  By  Machinery Disposal A/c      40,000
                               (` 1,00,000 + ` 40,000           Dec.  31  By  Balance c/d         1,80,000
                               + `  30,000)
                     Oct.   1  To  Bank A/c             50,000
                                                       2,20,000                                   2,20,000

                     Dr.                      ACCUMULATED DEPRECIATION ACCOUNT                        Cr.
                     Date     Particulars                `     Date     Particulars                `
                     2023                                       2023
                     Oct.   1  To  Machinery Disposal A/c      15,520   Jan.   1  By  Balance b/d (WN 1 and 2)      61,500
                                 (WN 1 and 3)                   Oct.   1  By  Depreciation A/c      4,320
                     Dec.  31  To  Balance c/d          68,740  Dec.  31  By  Depreciation A/c     18,440
                                                                          (` 10,240 + ` 5,700 + ` 2,500)
                                                        84,260                                     84,260
                     Dr.                         MACHINERY DISPOSAL ACCOUNT                           Cr.
                     Date     Particulars                `     Date     Particulars                `
                     2023                                       2023
                     Oct.   1  To  Machinery A/c        40,000   Oct.   1  By  Accumulated Depreciation A/c   15,520
                             To  Gain (Profit) on Sale of Machinery A/c   2,520        By  Cash A/c   2,200
                                (Profit & Loss A/c) (Bal. Fig.)             By  Insurance Company A/c      24,800
                                                        42,520                                     42,520
                     Working Notes:
                     1.                    CALCULUATION OF DEPRECIATION ON MACHINERY
                     Date of Purchase         1st January,     1st July,     1st October,    1st October,
                                               2020 (`)        2021 (`)       2022 (`)        2023 (`)
                     Cost of Machinery         1,00,000        40,000          30,000         50,000
                     Depreciation for 2021      20,000           ...            ...             ...
                     WDV on 1st January, 2021   80,000           ...            ...             ...
                     Depreciation for 2021      16,000          4,000           ...             ...
                     WDV on 1st January, 2022   64,000         36,000           ...             ...
                     Depreciation for 2022      12,800          7,200           1,500           ...
                                                                             (3 months)
                     WDV on 1st January, 2023   51,200         28,800          28,500           ...
                     Depreciation for 2023      10,240          4,320           5,700          2,500
                                                              (9 months)                     (3 months)
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