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Asset Disposal

Pronto Pack L...

Question

Pronto Pack Ltd. sells its old packaging machine for Rs. 300 on 31 December 2005. The machine was bought during the year ended 31 December 2000 for Rs. 10,000. Depreciation on plant and machinery is charged at 20% on a straight-line basis. The effect due to disposal of machine is:

Gain of Rs. 200

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Gain of Rs. 300

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Loss of Rs. 400

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Loss of Rs. 300

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Solution

The correct option is B
Gain of Rs. 300

Book Value = Nil, hence gain of Rs. 300.

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Similar questions

Q. Question: The following balances appear in the books of Crystal Ltd on January 1, 2005

Items	(Rs)
Machinery account on	$15, 00, 000$
Provision for depreciation account	$5, 50, 000$

On April 1, 2005, a machinery which was purchased on January 1, 2002 for Rs

2, 00, 000

was sold for Rs

75, 000

. A new machine was purchased on July 1, 2005, for Rs

6, 00, 000

. Depreciation is provided on machinery at

20 %

per annum on straight-line method and books are closed on December 31st every year. Prepare the Machinery account and Provision for depreciation account for the year ending December 31, 2005.

The following balances appear in the books of Crystal Ltd on January 1, 2005

$\begin{matrix} Items & (R s) Machinery account on & 15, 00, 000 Provision for depreciation account & 5, 50, 000 \end{matrix}$

On April 1, 2005, a machinery which was purchased on January 1, 2002 for Rs 2,00,000 was sold for Rs 75,000. A new machine was purchased on July 1, 2005 for Rs 6,00,000. Depreciation is provided on machinery at $20 %$ per annum on straight line method and books are closed on December 31st every year. Prepare the Machinery account and Provision for depreciation account for the year ending December 31, 2005.

Q. Question :

Berlia Ltd purchased a second hand machine for Rs

56, 000

on July 1, 2001 and spent Rs

24, 000

on its repair and installation and Rs

5, 000

for its carriage. On September 1, 2002,it purchased another machine for Rs

2, 50, 000

and spent RS

10, 000

on its installation.

(a) Depreciation is provided on machinery @

10 %

per annum on original cost method annually on December 31. Prepare Machinery account and Depreciation account from the year 2001 to 2004.
(b) Prepare Machinery account and Depreciation account from the year 2001 to 2004. If depreciation is provided on machinery annually on December 31.

Berlia Ltd. Purchased a second hand machine for Rs 56,000 on July 01, 2015 and spent Rs 24,000 on its repair and installation and Rs 5,000 for its carriage. On September 01, 2016, it purchased another machine for Rs 2,50,000 and spent Rs 10,000 on its installation.

(a) Depreciation is provided on machinery @10% p.a on original cost method annually on December 31. Prepare machinery account and depreciation account from the year 2015 to 2018.

(b) Prepare machinery account and depreciation account from the year 2015 to 20018, if depreciation is provided on machinery @10% p.a. on written down value method annually on December 31.

Berlia Ltd purchased a second hand machine for Rs 56,000 on July 1, 2001 and spent Rs 24,000 on its repair and installation and Rs 5,000 for its carriage. On September 1, 2002, it purchased another machine for Rs 2,50,000 and spent Rs 10,000 on its installation.

(a) Depreciation is provided on machinery @ $10 %$ per annum on original cost method annually on December 31. Prepare Machinery account and Depreciation account from the year 2001 to 2004.

(b) Prepare Machinery account and Depreciation account from the year 2001 to 2004. If depreciation is provided on machinery @ $10 %$ per annum on written down value method annually on December 31.

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Pronto Pack Ltd. sells its old packaging machine for Rs. 300 on 31 December 2005. The machine was bought during the year ended 31 December 2000 for Rs. 10,000. Depreciation on plant and machinery is charged at 20% on a straight-line basis. The effect due to disposal of machine is:

The correct option is B Gain of Rs. 300 Book Value = Nil, hence gain of Rs. 300.

The correct option is B
Gain of Rs. 300

Book Value = Nil, hence gain of Rs. 300.