Question

On 1st Jan. 2012, Panjim Dryfruits Ltd. bought a plant for ₹ 15,00,000. The company writes off depreciation @ 20% p.a. on Written Down Value Method and closes its books on 31st March every year. On 1st Oct. 2014, a part of the plant purchased on 1st Jan. 2012 for ₹ 3,00,000 was sold for ₹ 1,75,000. On 1st Jan. 2015 a fresh plant was purchased for ₹ 5,00,000. Prepare Plant A/c, Provision for Dep. A/c and Plant Disposal A/c.

Answer 1

Plant Account
Dr.				Cr.
Date	Particulars		Amount (Rs)		Date	Particulars		Amount (Rs)
2012					2012
Jan. 01	Bank A/c				Mar. 31	Balance c/d
	P1	3,00,000				P1	3,00,000
	P2	12,00,000	15,00,000			P2	12,00,000	15,00,000
			15,00,000					15,00,000
2012					2013
Apr. 01	Balance b/d				Mar. 31	Balance c/d
	P1	3,00,000				P1	3,00,000
	P2	12,00,000	15,00,000			P2	12,00,000	15,00,000
			15,00,000					15,00,000
2013					2014
Apr. 01	Balance b/d				Mar. 31	Balance c/d
	P1	3,00,000				P1	3,00,000
	P2	12,00,000	15,00,000			P2	12,00,000	15,00,000
			15,00,000					15,00,000
2014					2014
Apr. 01	Balance b/d				Oct. 01	Plant Disposal A/c (P1)		3,00,000
	P1	3,00,000			2015
	P2	12,00,000	15,00,000		Mar. 31	Balance c/d
2015						P2	12,00,000
Jan. 01	Bank A/c (P3)		5,00,000			P3	5,00,000	17,00,000
			20,00,000					20,00,000

Plant Disposal A/c
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2014			2014
Oct. 01	Plant A/c	3,00,000	Oct. 01		Provision for Depreciation A/c	1,35,840
	Profit and Loss A/c (Profit on Sale of P1)	10,840			Bank A/c (Sale of P1)	1,75,000
		3,10,840				3,10,840

Provision for Depreciation Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars			Amount (Rs)
2012			2012
Mar. 31	Balance c/d	75,000	Mar. 31		Depreciation A/c
					P1 (for 3 months)	15,000
					P2 (for 3 months)	60,000		75,000
		75,000						75,000
2013			2012
Mar. 31	Balance c/d	3,60,000	Apr. 01		Balance b/d			75,000
			2013
			Mar. 31		Depreciation A/c
					P1	57,000
					P2	2,28,000		2,85,000
		3,60,000						3,60,000
2014			2013
Mar. 31	Balance c/d	5,88,000	Apr. 01		Balance b/d			3,60,000
			2014
			Mar. 31		Depreciation A/c
					P1	45,600
					P2	1,82,400		2,28,000
		5,88,000						5,88,000
2014			2014
Oct. 01	Plant Disposal A/c (P1) (15,000+57,000+45,600+18,240)	1,35,840	Apr. 01		Balance b/d			5,88,000
2015			Oct. 01		Depreciation A/c (M1) (for 6 months)			18,240
Mar. 31	Balance c/d	6,41,320	2015
			Mar. 31		Depreciation A/c
					21		1,45,920
					P 3 (for 3 months)		25,000	1,70,920
		7,77,160						7,77,160

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

Particulars	Amount
Value of Plant on Jan. 01, 2012	3,00,000
Less: Depreciation for 3 months	15,000
Value of Plant on Apr. 01, 2012	2,85,000
Less: Depreciation	57,000
Value of Plant on Apr. 01, 2013	2,28,000
Less: Depreciation	45,600
Value of Plant on Apr. 01, 2014	1,82,400
Less: Depreciation for 3 months	18,240
Value of Plant on Oct. 01, 2014	1,64,160
Less: Sale Value	1,75,000
Profit on Sale	10,840

Note: In order to make easy calculation, plant purchased on Jan 01, 2012 has been divided into two parts i.e. P1 and P2.

Thus, P1: Rs 3,00,000 (sold for Rs 1,75,000 on Oct. 01, 2014)

P2: Rs 12,00,000