Question

The following data is given to you regarding the asset- Plant of Tinu Ltd. whose accounting year ends on 31^st December every year. 

• Plant held on 1.1.2006-₹10,000 
• Plant bought on 1.1.2007 – ₹20,000 
• Plant bought on 1.4.2007 – ₹30,000
• Plant held on 1.1.2006 sold on 1.4.2007 – ₹7000 
• Depreciation @ 10% p.a. on original cost method. 
• Prepare Plant A/c.

Answer 1

Calculation of loss of sale of plant

Original cost (1/1/2006)	10,000
Less Depreciation for one year	1,000
(1/1/2006 to 31/12/2006) 10000 x 10%	9,000
Less Depreciation for 3 months
(31/12/06 to 1/4/2007)	250
10000 \(\times\) 10/100 \(\times\) 3/12
Less sales value	7,000
Loss on sale	1,750