Question

A company whose accounting year is a financial year, purchased on 1st July 2015 Machinery costing Rs 30,000.
If purchased further machinery on 1st January, 2016 costing Rs 20,000 and on 1st October, 2016 costing Rs 10,000.
On 1st April, 2017, one-third of the machinery installed on 1st July, 2015 became obsolete and was sold for Rs 3,000. Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2018?

Answer 1

Correct Answer - [Depreciation on 31st March,: 2016= Rs 2,750; 2017 = Rs 5,500; and 2018 = Rs 5,000; Loss on Sale of Machinery- Rs 5,250; on 1st April, 2018: Balance Rs 38,500, i.e., in Machinery I `(2//3)`-Rs 14,500; Machinery II- Rs 15,500 and Machinery III- Rs 8,500.]