Question

A company whose accounting year is a financial year, purchased on 1st July, 2015 machinery costing ₹ 30,000.
It purchased further 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.
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, 2018?

Answer 1

Machinery Account
Dr.															Cr.
Date		Particulars			J.F.	Amount (₹)	Date	Particulars					J.F.	Amount (₹)
2015							2016
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
2016							2017
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
2017							2017
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
							2018
		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 1/3^rd Portion of Machine I

Particulars	Amount (₹)
Book Value of 1/3rd portion of Machine I on April 01, 2017 (24,750 × 1/3)	8,250
Less: Sale Value	(3,000)
Loss on sale	5,250