Question

On 1st April, 2010, Plant and Machinery was purchased for ₹ 1,20,000. New machinery was purchased on 1st Oct., 2010, for ₹ 50,000 and on 1st July, 2011, for ₹ 25,000.
On 1st January, 2013, a machinery of the original value of ₹ 20,000 which was included in the machinery purchased on 1st April, 2010, was sold for ₹ 6,000. Prepare Plant & Machinery A/c for three years after providing depreciation at 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year.

Answer 1

Plant & Machinery Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars		Amount (Rs)
2010				2011
Apr. 01	Bank A/c			Mar. 31		Depreciation A/c
	M1	20,000				M1	2,000
	M2	1,00,000	1,20,000			M2	10,000
Oct. 01	Bank A/c (M3)		50,000			M3 (for 6 months)	2,500	14,500
				Mar. 31		Balance c/d
						M1	18,000
						M2	90,000
						M3	47,500	1,55,500
			1,70,000					1,70,000
2011				2012
Apr. 01	Balance b/d			Mar. 31		Depreciation A/c
	M1	18,000				M1	2,000
	M2	90,000				M2	10,000
	M3	47,500	1,55,500			M3	5,000
July 01	Bank A/c (M4)		25,000			M4 (for 9 months)	1,875	18,875
				Mar. 31		Balance c/d
						M1	16,000
						M2	80,000
						M3	42,500
						M4	23,125	1,61,625
			1,80,500					1,80,500
2012				2013
Apr.01	Balance b/d			Jan. 01		Depreciation A/c (M1)		1,500
	M1	16,000				Bank A/c (Sale of M1)		6,000
	M2	80,000				Profit and Loss A/c (Loss on Sale of M1)		8,500
	M3	42,500		Mar. 31		Depreciation A/c
	M4	23,125	1,61,625			M2	10,000
						M3	5,000
						M4	2,500	17,500
				Mar. 31		Balance c/d
						M2	70,000
						M3	37,500
						M4	20,625	1,28,125
			1,61,625					1,61,625

Working Note: Calculation of Profit or Loss on Sale of M1

Particulars	Amount
Value of Machinery on Apr. 01, 2012	16,000
Less: Depreciation for 9 months	1,500
Value of Machinery on Jan.01, 2013	14,500
Less: Sale Value	6,000
Loss on Sale	8,500

Note: In order to make easy calculation plant and machinery purchased on April 01, 2010 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 20,000 (sold for Rs 6,000)

M2: Rs 1,00,000 (remains in the business)