Question

ABC Ltd. purchased on 1st April 2006 a small plant for ₹ 1,00,000. On 1st October 2006 an additional plant was purchased costing ₹ 50,000. On 1st October 2007 the plant purchased on 1st April 2006, having become obsolete, was sold for ₹ 40,000.
Depreciation is provided @10% p.a. on original cost on 31st March every year. Show the plant A/c, Provision for Depreciation A/c and Plant Disposal A/c for the Years 2006-07 and 2007-08.

Answer 1

Plant Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2006			2007
Apr. 01	Bank A/c	1,00,000	Mar. 31		Balance c/d	1,50,000
Oct. 01	Bank A/c	50,000
		1,50,000				1,50,000
2007			2007
Apr. 01	Balance b/d	1,50,000	Oct. 01		Plant Disposal A/c	1,00,000
			2008
			Mar. 31		Balance c/d	50,000
		1,50,000				1,50,000

Plant Disposal A/c
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2007			2007
Oct. 01	Plant A/c	1,00,000	Oct. 01		Provision for Depreciation A/c	15,000
					Bank A/c (Sale)	40,000
					Profit and Loss A/c (Loss on Sale)	45,000
		1,00,000				1,00,000

Provision for Depreciation Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2007			2007
Mar. 31	Balance c/d	12,500	Mar. 31		Balance b/d	12,500
		12,500				12,500
2007			2007
Oct. 01	Plant Disposal A/c (10,000+ 5,000)	15,000	Apr. 01		Balance b/d	12,500
2008			Oct. 01		Depreciation A/c	5,000
Mar. 31	Balance c/d	7,500	2008
			Mar. 31		Depreciation A/c (WN2)	5,000
		22,500				22,500

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars	Amount
Value of Machinery on Apr. 01, 2006	1,00,000
Less: Depreciation	10,000
Value of Machinery on Apr. 01, 2007	90,000
Less: Depreciation for 6 months	5,000
Value of Machinery on Oct. 01, 2007	85,000
Less: Sale Value	40,000
Loss on Sale	45,000

WN2: Depreciation charged during the year