Page 126 - ISCDEBK-XI

Depreciation 15.11

Dr. ACCUMULATED DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2020 2019
Jan. 1 To Machinery A/c 15,520 April 1 By Balance b/d (WN 1 and 2) 61,500
(WN 1 and 3) 2020
March 31 To Balance c/d 68,740 Jan. 1 By Depreciation A/c 4,320
March 31 By Depreciation A/c 18,440
(` 10,240 + ` 5,700 + ` 2,500)
84,260 84,260

Working Notes:

1. CALCULUATION OF DEPRECIATION ON MACHINERY
Date of Purchase 1st April, 1st October, 1st January, 1st January,
2016 (`) 2017 (`) 2019 (`) 2020 (`)
Cost of Machinery 1,00,000 40,000 30,000 50,000
Depreciation for 2016–17 20,000 ... ... ...
WDV on 1st April, 2017 80,000 ... ... ...
Depreciation for 2017–18 16,000 4,000 ... ...
WDV on 1st April, 2018 64,000 36,000 ... ...
Depreciation for 2018–19 12,800 7,200 1,500 ...
(3 months)
WDV on 1st April, 2019 51,200 28,800 28,500 ...
Depreciation for 2019–20 10,240 4,320 5,700 2,500
(9 months) (3 months)

2. Balance of Accumulated Depreciation Account on 1st April, 2019
= (` 20,000 + ` 16,000 + ` 12,800) + (` 4,000 + ` 7,200) + ` 1,500 = ` 61,500.
3. Accumulated Depreciation on Machinery Sold = ` 4,000 + ` 7,200 + ` 4,320 = ` 15,520.

Illustration 8.
A firm writes off 95% of the cost of the machines over 10 years following Straight Line Method,
leaving the rest 5% as estimated scrap value. Full depreciation is provided even if an asset is
used only for part of the year.
On 31st December, 2018, the original cost of the machines in possession were:
(i) Machines purchased in 2007 or earlier ` 2,40,000
(ii) Machines purchased in 2010 ` 80,000
(iii) Machines purchased in 2014 ` 60,000
On 30th June, 2019, a machine purchased in 2007 for ` 20,000 was sold for ` 1,800. On
30th November 2019, a machine purchased in 2014 for ` 30,000 was sold for ` 10,000 and on
the same date a new machine was purchased for ` 90,000.
Show the Machinery Account and Provision for Depreciation Account for the year ending
31st December, 2019.