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Depreciation                                                                  15.15

                     Note:   Calculation of Profit and Loss on Sale of Machine (I, Part)           `

                          Book value of Machine (1st April, 2021)                                30,000
                          Less: Depreciation charged (` 3,000 + ` 3,000 + ` 750*)                 6,750
                           Book value on 1st July, 2023 (Date of Sale)                           23,250
                          Less: Sale Proceeds                                                    16,000
                          Loss on Sale of Machinery                                               7,250
                          *` 30,000 × 10/100 × 3/12 = ` 750.

                       11.  On 1st April, 2021,  Z  Ltd. purchased machinery for  ` 1,20,000 and on
                         30th September, 2022, it acquired additional machinery for  ` 20,000. On
                         30th June, 2023 one of the original machine (purchased on 1st April, 2021) which
                         had cost ` 5,000 was found to have become obsolete and was sold as scrap for
                         ` 500. On the same date a new machine was purchased for ` 8,000. Depreciation
                         is  to  be  charged  @  15%  p.a.  on  written  down  value.  Accounts  are  closed  on
                         31st March each year. Show Machinery Account for the first three years.
                                                                                     (KVS 2015, Modified)

                     Solution:
                     Dr.                             MACHINERY ACCOUNT                                Cr.
                     Date     Particulars                `     Date     Particulars                `
                     2021                                       2022
                     April   1  To  Bank A/c—Mach I      1,20,000   March  31  By  Depreciation A/c—Mach I      18,000
                                                                March  31  By  Balance c/d— Mach I  1,02,000
                                                       1,20,000                                   1,20,000
                     2022                                       2023
                     April   1  To  Balance b/d— Mach I      1,02,000   March  31  By  Depreciation A/c:
                     Sep.  30  To  Bank A/c—Mach II      20,000            —Mach I        15,300
                                                                          —Mach II        1,500    16,800
                                                                March  31  By  Balance c/d:
                                                                          —Mach I         86,700
                                                                          —Mach II        18,500   1,05,200
                                                       1,22,000                                   1,22,000
                     2023                                       2023
                     April   1  To  Balance b/d:               June  30  By  Depreciation A/c        135
                                —Mach I        86,700                      —Mach I (Sold part)
                                —Mach II       18,500   1,05,200   June  30  By  Bank A/c            500
                     June  30  To  Bank A/c—Mach III      8,000   June  30  By  Loss on Sale of Machinery A/c    2,978
                                                                           (Profit & Loss A/c) (Note)
                                                                2024     By  Depreciation A/c:
                                                                March  31    —Mach I      12,463
                                                                          —Mach II        2,775
                                                                          —Mach III         900    16,138
                                                                March  31  By  Balance c/d:
                                                                           —Mach I        70,624*
                                                                          —Mach II        15,725
                                                                           —Mach III      7,100    93,449
                                                       1,13,200                                   1,13,200
                     *` 86,700 – ` 3,613 (sold) – ` 12,463 (Depreciation) = ` 70,624.
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