Page 130 - ISCDEBK-XI

Depreciation 15.15

Solution:
Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `
2014 2015
July 1 To Bank A/c 1,20,000 March 31 By Depreciation A/c 80,000
1
Oct. 1 To Bank A/c 1,20,000 (33 % of ` 2,40,000)
3
March 31 By Balance c/d 1,60,000
2,40,000 2,40,000
2015 2016
April 1 To Balance b/d 1,60,000 March 31 By Depreciation A/c 60,000
1
Oct. 1 To Bank A/c 20,000 (33 % of ` 1,80,000)
3
March 31 By Balance c/d 1,20,000
1,80,000 1,80,000
2016 2016
April 1 To Balance b/d 1,20,000 April 1 By Bank A/c (Sale) 12,000
By Loss on Sale of Machine A/c (WN 1) 5,778
2017 2017
Jan. 1 To Bank A/c 60,000 March 31 By Depreciation A/c (WN 2) 54,074
By Balance c/d 1,08,148
1,80,000 1,80,000
Working Notes:
1. Calculation of Loss on Sale of Machinery: `
Cost of Machinery on 1st July, 2014 40,000
Less: Depreciation for 2014–15 13,333
Book Value on 1st April, 2015 26,667
Less: Depreciation for 2015–16 8,889
Book Value on 1st April, 2016 17,778
Less: Amount realised on Sale 12,000
Loss on Sale of Machinery 5,778
2. Depreciation for 2016–17:
1
33 % on ` 1,62,222 (i.e., ` 1,20,000 + ` 60,000 – ` 17,778) = ` 54,074.
3
Illustration 11.
A company charges depreciation on Plant and Machinery under Written Down Value Method @ 15%
per annum. On 1st April, 2013 the balance of Plant and Machinery in ledger stood at ` 4,60,000.
Following particulars are given relating to Plant and Machinery during the four years ended on
31st March, 2017:
1st September, 2013 : A machine purchased for ` 20,000 (installation expenses ` 1,000) on
1st May, 2011 was fully destroyed in an accident.
1st July, 2014 : Purchased a new machine costing ` 50,000 (installation expenses
` 2,500). A sum of ` 30,000 was paid on the same date and the balance
was paid in May, 2015.
31st August, 2015 : Plant purchased on 1st April, 2012 for ` 30,000 (installation expenses
` 1,500) was disposed off for ` 36,000.
1st November, 2016 : Some old machineries (Book Value on 1st April, 2013—` 10,000) were
sold for ` 4,000.
Show Plant and Machinery Account as it would appear in the books of the company for the four
years ended 31st March, 2017 assuming depreciation is charged even if the asset is sold or destroyed.