Question

A machine costing ₹30000 was bought on 1/4/2000. Further machinery costing ₹2000 was acquired on 1/10/2000 and another machinery costing ₹10000 was installed on 1/7/2001. On 1/7/2002 the machinery bought on 1/7/2001 was sold for ₹3000. Accounts are closed on 31 December every year. Assuming 10% depreciation p.a. Prepare Machinery a/c under the diminishing balance method.

Answer 1

Calculation of Loss on sale of machinery

Original cost of machinery sole	10000
Less Depreciation of half year (6 month)	- 500
(1/7/2001 to 31/12/2001) 10000 x 10/100 x 6/12	9500
Less Depreciation for 6 month in 2002
(1/1/2002 to 1/7/2002)	- 475
9500 x 10/100 x 6/12	9025

 Calculation of total depreciation as on 31/12/2002

Book value as on 1/1/2001	29700
Less Depreciation @ 10%	2970
Book value as on 1/1/2002	26730
Depreciation @ 10% (26730 x 10/100)	2673
Book value as 1/1/2001	10000
Less Depreciation @ 10% for 6 months	500
Book value as on 1/1/2002	9500
Depreciation@ 10% for 6 months (9500 x 10/100 x 6/12)	475
Total depreciation for 31/12/2002 (2673 + 475)	3148

 

Dr					Cr
Date	Particulars	Amount	Date	Particulars	Amount
1/4/2000 1/10/2000	Cash  cash	30000 2000	31/12/00	Depreciation (30000 x 10/100 x 9/12) = 2250  2000 x 10/100 x 3/12 = 50 Balance c/d	2300 29700
		32000			32000
1/1/2001	Balance b/d	29700	31/12/01	Depreciation (29700 x 10/100) = 2970 10000 x 10/100 x 6/12 = 500 Balance c/d	3470 36230
		39700			39700
1/1/2002	Balance b/d	36230	1/7/02 31/12/02 31/12/02	Cash Depreciation Profit & Loss a/c Balance c/d	3000 3146 6025 24054
		36230			36230
1/1/2003	Balance b/d	24057