In the books of D Ltd. machinery account shows a debit balance of Rs. $60, 000$ as on April 1, 2003. The machinery was sold on September 30,2004, for Rs. $20, 000$ . The company charges depreciation @ $20$ %p.a on diminishing balance method. Profit/Loss on sale will be __________.

R s .23, 200

Profit

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R s .23, 200

loss

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R s .7, 800

profit

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R s .7, 800

loss

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Solution

The correct option is B $R s .23, 200$ loss
Calculation of Profit and loss on sale of machinery in the books of D Ltd.

Book value of machinery as on April 1, 2003 Rs. 60000

Less : Depreciation @20 % p.a Rs.(12000)

(April 1, 2003 - March 31,2004)

Written down value of machinery on April 1, 2004 Rs. 48000

Less: Depreciation @20 % p.a for 6 months Rs. (4800)

(April 1, 2004 - sept. 30, 20004)

Written down value of machinery on Sept. 30, 2004 Rs. 43200

Less : Sales value of machinery Rs. (20000)

(Profit)/ Loss on sale of machinery Rs. 23200

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In the books of D Ltd. machinery account shows a debit balance of Rs. 60,000 as on April 1, 2003. The machinery was sold on September 30,2004, for Rs. 20,000. The company charges depreciation @20%p.a on diminishing balance method. Profit/Loss on sale will be __________.

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