Question

On 1st April, 2009, a Company bought Plant and Machinery costing ₹ 68,000. It is estimated that its working life is 10 years, at the end of which it will fetch ₹ 8,000. Additions are made on 1st April, 2010 to the value of ₹ 40,000 (Residual value ₹ 4,000). More additions are made on Oct. 1, 2011 to the value of ₹ 9,800 (Break up value ₹ 800). The working life of both the additional Plant and machinery is 20 years.
Show the Plant and Machinery account for the first four years, if depreciation is written off according to Straight Line Method. The accounts are closed on 31st March every year.

Answer 1

Plant & Machinery Account
Dr.						Cr.
Date	Particulars			Amount (Rs)	Date		Particulars					Amount (Rs)
2009					2010
Apr. 01	Bank A/c (P1)			68,000	Mar. 31		Depreciation A/c					6,000
					Mar. 31		Balance c/d					62,000
				68,000								68,000
2010					2011
Apr. 01	Balance b/d (P1)			62,000	Mar. 31		Depreciation A/c
Apr. 01	Bank A/c (P2)			40,000			P1			6,000
							P2			1,800		7,800
					Mar. 31		Balance c/d
							P1			56,000
							P2			38,200		94,200
				1,02,000								1,02,000
2011					2012
Apr. 01	Balance b/d				Mar. 31		Depreciation A/c
	P1		56,000				P1				6,000
	P2		38,200	94,200			P2				1,800
Oct. 01	Bank A/c (P3)			9,800			P3 (for 6 months)				225	8,025
					Mar. 31		Balance c/d
							P1		50,000
							P2		36,400
							P3		9,575			95,975
				1,04,000								1,04,000
2012					2013
Apr. 01	Balance b/d				Mar. 31		Depreciation A/c
	P1	50,000					P1	6,000
	P2	36,400					P2	1,800
	P3	9,575		95,975			P3	450				8,250
					Mar. 31		Balance c/d
							P1		44,000
							P2		34,600
							P3		9,125			87,725
				95,975								95,975

Working Note: Calculation of Depreciation

P1	P2	P3