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# A company whose accounting year is a financial year, purchased on 1st July, 2014 machinery costing ₹ 30,000. It purchased further machinery on 1st January, 2015 costing ₹ 20,000 and on 1st October, 2015 costing ₹ 10,000. On 1st April, 2016, one-third of the machinery installed on 1st July, 2014 became obsolete and was sold for ₹ 3,000. Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2017?

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Solution

## Machinery Account Dr. Cr. Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs) 2014 2015 July 01 Bank (I) 30,000 March 31 Depreciation 2015 Jan. 01 Bank (II) 20,000 I (for 9 months) 2,250 II 500 2,750 March 31 Balanced c/d I 27,750 II 19,500 47,250 50,000 50,000 2015 2016 April 01 Balance b/d March 31 Depreciation I 27,750 I 3,000 II 19,500 47,250 II 2,000 III 500 5,500 Oct. 01 Bank (III) 10,000 March 31 Balance c/d I 24,750 II 17,500 III 9,500 51,750 57,250 57,250 2016 2016 April 01 Balance b/d April 01 Bank I(1/3rd portion) 3,000 I 24,750 April 01 Profit and Loss (Loss on Sale of I) 5,250 2017 II 17,500 March 31 Depreciation III 9,500 51,750 I (on 2/3rd portion) 2,000 II 2,000 III 1,000 5,000 March 31 Balance c/d I (on 2/3rd portion) 14,500 II 15,500 III 8,500 38,500 51,750 51,750 Working Notes 1. Calculation of Depreciation Calculation of profit or loss on sale of 1/3rd Portion of Machine I Particulars Amount (Rs) Book Value of 1/3rd portion of Machine I on April 01, 2016 (24,750 × 1/3) 8,250 Less: Sale Value (3,000) Loss on sale 5,250

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