Question

A company purchased on 1st July, 2015 machinery costing ₹ 30,000. It further purchased machinery on 1st January, 2016 costing ₹ 20,000 and on 1st October, 2016 costing ₹ 10,000. On 1st April, 2017, one-third of the machinery installed on 1st July, 2015 became obsolete and was sold for ₹ 3,000. The company follows financial year as accounting year.
Show how the Machinery Account would appear in the books of company if depreciation is charged @ 10% p.a. on Written Down Value Method.

Answer 1

Machinery Account
Dr.													Cr.
Date		Particulars			J.F.	Amount (Rs)	Date	Particulars			J.F.	Amount (Rs)
2015							2016
July 01		Bank					Mar.31	Depreciation
		I(2/3)		20,000				I(2/3)		1,500
2016		I(1/3)		10,000		30,000		I(1/3)		750
Jan.01		Bank (II)				20,000		II		500		2,750
							Mar.31	Balance c/d
								I(2/3)		18,500
								I(1/3)		9,250
								II		19,500		47,250
						50,000						50,000
2016							2017
Apr 01		Balance b/d					Mar 31	Depreciation
		I(2/3)	18,500					I(2/3)	1,850
		I(1/3)	9,250					I(1/3)	925
		II	19,500			47,250		II	1,950
Oct 01		Bank (III)				10,000		III	500			5,225
							Mar 31	Balance c/d
								I(2/3)	16,650
								I(1/3)	8,325
								II	17,550
								III	9,500			52,025
						57,250						57,250
2017							2017
Apr.01		Balance b/d					Apr.01	Bank (I)(1/3)				3,000
		I(2/3)	16,650				Apr.01	Profit and Loss (Loss)				5,325
		I(1/3)	8,325				Mar.31,	Depreciation
		II	17,550				2018	I(2/3)	1,665
		III	9,500			52,025		II	1,755
								III	950			4,370
							Mar.31	Balance c/d
								I(2/3)	14,985
								II	15,795
								III	8,550			39,330
						52,025						52,025

Working Note:

(1) Calculation of Profit or Loss on Sale of Plant I(1/3):

Particulars	Amount (Rs)
Book Value of Plant I (1/3) as on Apr 01, 2017	8,325
Less: Sale Value	(3,000)
Loss on Sale	5,325