Question

On 1st August, 2010, Hindustan Toys Ltd. purchased a plant for ₹ 12,00,000. The firm writes off depreciation at 10% p.a. on the diminishing balance and the books are closed on 31st March each year. On 1st July, 2012, a part of this plant of which the original cost was ₹ 1,80,000 was sold for ₹ 1,00,000 and on the same date a new plant was purchased for ₹ 4,00,000. Show the Plant Account and Provision for Depreciation Account for three years ending 31st March, 2013.

Answer 1

Plant Account
Dr.				Cr.
Date	Particulars		Amount (Rs)	Date	Particulars		Amount (Rs)
2010				2011
Aug. 01	Bank A/c			Mar. 31	Balance c/d
	P1	1,80,000			P1	1,80,000
	P2	10,20,000	12,00,000		P2	10,20,000	12,00,000
			12,00,000				12,00,000
2011				2012
Apr. 01	Balance b/d			Mar. 31	Balance c/d
	P1	1,80,000			P1	1,80,000
	P2	10,20,000	12,00,000		P2	10,20,000	12,00,000
			12,00,000				12,00,000
2012				2012
Apr. 01	Balance b/d			July 01	Provision for Depreciation A/c		32,580
	P1	1,80,000			Bank A/c (Sale of P1)		1,00,000
	P2	10,20,000	12,00,000		Profit and Loss A/c (Loss on Sale of P1)		47,420
July 01	Bank A/c (P3)		4,00,000	2013
				Mar. 31	Balance c/d
					P2	10,20,000
					P3	4,00,000	14,20,000
			16,00,000				16,00,000

Provision for Depreciation Account
Dr.			Cr.
Date	Particulars	Amount (Rs)	Date	Particulars		Amount (Rs)
2011			2011
Mar. 31	Balance c/d	80,000	Mar. 31	Depreciation A/c
				P1 (for 8 months)	12,000
				P2 (for 8 months)	68,000	80,000
		80,000				80,000
2012			2011
Mar. 31	Balance c/d	1,92,000	Apr. 01	Balance b/d		80,000
			2012
			Mar. 31	Depreciation A/c
				P1	16,800
				P2	95,200	1,12,000
		1,92,000				1,92,000
2012			2012
July 01	Plant A/c (P1) (12,000 + 16,800 + 3,780)	32,580	Apr. 01	Balance b/d		1,92,000
2013			July 01	Depreciation A/c (P1) (for 3 months)		3,780
Mar. 31	Balance c/d	2,78,880	2013
			Mar. 31	Depreciation A/c
				P2	85,680
				P3 (for 9 months)	30,000	1,15,680
		3,11,460				3,11,460

Working Note: Calculation of Profit & Loss on Sale of P1

Particulars	Amount
Value of Plant on Aug. 01, 2010	1,80,000
Less: Depreciation for 8 months	12,000
Value of Plant on Apr. 01, 2011	1,68.000
Less: Depreciation	16,800
Value of Plant on Apr. 01, 2012	1,51,200
Less: Depreciation for 3 months	3,780
Value of Plant on July 01, 2012	1,47,420
Less: Sale Value	1,00,000
Loss on Sale	47,420

Note: In order to make easy calculation, plant purchased on Aug. 01, 2010 has been divided into two parts i.e. P1 and P2.

Thus, P1: Rs 1,80,000 (sold for Rs 1,00,000 on July 01, 2012)

P2: Rs 10,20,000