Date of purchase 1.1.2013, Purchase Price of Machine Rs. 80,000, Installation charges Rs. 20,000. On 30th Sept. 2014, this machine was sold for Rs. 50,000. Depreciation is to be provide @ 20% p.a.according to Written Down Value Method. Accounts are closed on 31 st March each year. The loss on sale of machine is_______.
Date of purchase 1.1.2013, Purchase Price of Machine Rs. 80,000, Installation charges Rs. 20,000. On 30th Sept. 2014, this machine was sold for Rs. 50,000. Depreciation is to be provide @ 20% p.a.according to Written Down Value Method. Accounts are closed on 31 st March each year. The loss on sale of machine is_______.
The correct option is C Rs. 18,400
Solution
Purchase price = Rs 80,000
Installation cost = Rs 20,000
On 30th September 2014 Machine was sold at Rs
50,000
Calculation Of Profit/Loss on sale of Machine:
Original Cost as on 1.1.2013 1,00,000
Less: Depreciation @20% at the end
(1,00,000 X 20% X 3/12) (5,000)
Book Value as on 31.3.2013 95,000
Less: Depreciation @20%
(95,000@20%) (19,000)
Book Value as on 31.3.2014 76,000
Less: Depreciation @20% up to the
date of sale of Machine
(76,000 X 20% X 6/12) (7600)
68,400
Less: Sale Price (50,000)
Loss on Sale 18,400
Solution
Purchase price = Rs 80,000
Installation cost = Rs 20,000
On 30th September 2014 Machine was sold at Rs 50,000
Calculation Of Profit/Loss on sale of Machine:
Original Cost as on 1.1.2013 1,00,000
Less: Depreciation @20% at the end
(1,00,000 X 20% X 3/12) (5,000)
Book Value as on 31.3.2013 95,000
Less: Depreciation @20%
(95,000@20%) (19,000)
Book Value as on 31.3.2014 76,000
Less: Depreciation @20% up to the
date of sale of Machine
(76,000 X 20% X 6/12) (7600)
68,400
Less: Sale Price (50,000)
Loss on Sale 18,400
