Question

John Enterprises has the following balances in its books as on March 31, 2005.

Machinery (Gross value) -₹6,00,000

Provision for depreciation – ₹2,50,000

A machine purchased for ₹1,00,000 on

December 1 2001, having accumulated

depreciation amounting to₹60,000 was sold on April 1 2006 for₹35,000.

Prepare Machinery a/c and Machinery Disposal a/c.

Answer 1

Machinery Disposal a/c

Machinery A/c

Note :

Computation of loss on sales of machinery
Original cost of the asset being sold	100000
Less Accumulated depreciation	60000
	40000
Sales value realised	35000
Loss on sales of machinery	40000-35000
	5000