# 11th | chapter:15 | Depreciation | Question No. 25 to 27 | Ts grewal Solution 2022-2023

#### Following balances appear in the books of M/s. Amrit as on 1st April, 2020:

 ` 2020 1st April Machinery A/c 60,000 Provision for Depreciation A/c 36,000

On 1st April, 2020, they decided to dispose off a machinery for  ` 8,400 which was purchased on 1st April, 2016 for  ` 16,000.
You are required to prepare the Machinery Account, Provision for Depreciation Account and Machinery Disposal Account for the year ended 31st March, 2021. Depreciation was charged at 10% p.a on Cost following Straight Line Method.

#### Answer:

 Books of M/s. Amrit Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 April 01 Balance b/d (44,000 + 16,000) 60,000 April 01 Machinery Disposal 16,000 2021 Mar.31 Balance c/d 44,000 60,000 60,000

 Provision for Depreciation Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 April 01 Machinery Disposal (4 years) 6,400 April 01 Balance b/d 36,000 2021 2021 Mar.31 Balance c/d 34,000 Mar.31 Depreciation (on Machine costing Rs 44,000) 4,400 40,400 40,000

 Machinery Disposal Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2020 April 01 Machinery 16,000 April 01 Provision for Depreciation 6,400 2021 Mar.31 Bank (Sale) 8,400 Profit and Loss (Loss) 1,200 16,000 16,000

Working Note

1. Calculation of profit or loss on Machine Sold:

 Particulars ( `) Original Cost of Machine Sold on April 01, 2020 16,000 Less: Accumulated Depreciation on Machine Sold (1,600 × 4) (6,400) Book Value of April 01, 2020 9,600 Less: Sale Value (8,400) Loss on Sale 1,200

#### Answer:

 Books of Ashoka & Co. Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2019 2020 Apr.01 Bank (I) 1,50,000 Oct 01 Bank (II) 50,000 Mar.31 Balance c/d 2,00,000 2,00,000 2,00,000 2020 2021 Apr.01 Balance b/d 2,00,000 Mar.31 Balance c/d 2,00,000 2,00,000 2,00,000 2021 2021 Apr.01 Balance b/d 2,00,000 Sep 30 Machinery Disposal A/c 50,000 2022 Mar.31, Balance c/d 1,50,000 2,00,000 2,00,000

 Accumulated Depreciation Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2020 2019 Mar.31 Balance c/d Mar. 31 Depreciation I 15,000 I 15,000 II 2,500 17,500 II (for 6 months) 2,500 17,500 17,500 17,500 2021 2020 Mar.31 Balance c/d Apr. 01 Balance b/d I 30,000 I 15,000 II 7,500 37,500 2021 II 2,500 17,500 Mar. 31 Depreciation I 15,000 II 5,000 20,000 37,500 37,500 2021 2021 Sep 30 Machinery disposal (II) 10,000 Apr. 01 Balance b/d Mar.31, 2022 Balance c/d (I) 45,000 I 30,000 II 7,500 37,500 2021 Sep 30 Depreciation (II) 2,500 Mar. 31 Depreciation (I) 15,000 55,000 55,000

 Machinery Disposal Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2021 2021 Sep 30 Machinery A/c 50,000 Sep 30 Accumulated Depreciation A/c 10,000 Sep 30 Bank A/c 40,000 50,000 50,000

Working note

1. Calculation of Profit or Loss on sale of Machine II

 Particulars ( `) Original Cost Oct 01, 2021 50,000 Less: Accumulated Depreciation (10,000) Book Value on Sept 30, 2021 40,000 Less: Sale Value (40,000) Profit / Loss NIL

Question 27

On 1st April, 2014, Veeru Ltd. purchased a machinery for `2,50,000 and spent `50,0000 on its installation. On 1st July, 2016, 1/3rd of machinery purchased on 1st April, 2014 was sold for `15,000 and a new machinery at the cost of `2,00,000 was purchased on the same date. The company has adopted the method of providing depreciation 15% p.a. on Straight Line Method. Show the Machinery Account, Provision for Depreciation Account and Machinery Disposal Account for three years ended on 31st March, 2015 to 31st March, 2017. (Delhi)

Answer

 Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2014 2015 April 01 Bank A/c (M1) 2,50,000 Mar.31 Balance C/d (M1) 3,00,000 April 01 Bank A/c (M1) 50,000 3.00.000 3.00.000 2015 2016 April 01 Balance B/d (M1) 3,00,000 Mar.31 Balance C/d (M1) 3,00,000 3.00.000 3.00.000 2016 2016 April 31 Balance B/d (M1) 3.00.000 July 01 Machinery Disposal A/c (M1) 1,00,000 2017 July 01 Bank A/c (M2) 2,00,000 2017 Mar.31 Balance c/d M1 – 2,00,000 M2 – 2,00,000 4,00,000 5,00,000 5,00,000

P

 Provision for Depreciation on Machinery Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2015 2015 Mar.31 Balance c/d (M1) 45,000 Mar.31 Depreciation A/c (M1) 45,000 45,000 45,000 2015 April.01 Balance c/d (M1) 45,000 2016 2016 Mar.31 Balance c/d (M1) 90,000 Mar.31 Depreciation A/c (M1) 45,000 90,000 90,000 2016 2016 July 01 Machinery Disposal A/c (M1) 33,750 April.01 Balance c/d (M1) 90,000 Mar.31 Balance c/d 2016 M1- 90,000 M1- 22,500 1,12,500 July.01 Depreciation A/c (On 1/3 Part of M1) 3,750 Mar.31 Depreciation A/c (On 2/3 of M1) 30,000 M2- 22,500 52,500 1,46,250 1,46,250

M

 Machinery Disposal Account Dr. Cr. Date Particulars J.F. ( `) Date Particulars J.F. ( `) 2016 2016 July 01 Machinery A/c (M1) 1,00,000 July 01 Provision for Depreciation on Machinery A/c (M1) 33,750 July 01 Bank A/c (Sale) 15,000 July 01 Profit and loss A/c (Loss) 51,250 1,00,000 1,00,000