Question

On 1st July 2016 M/s. Ramai & Co. .sold Machinery for ₹ 7,000 the original cost of ₹ 10,000 which was purchased on 18th April 2015. Find out the profit or loss on sale of Machinery by charging depreciation at 10% p.a. on original cost on 31st March every year.

Answer 1

Original cost of machinery on 01.04.2015 = ₹ 10,000

Less: Dep for 2015-16 for 12 months = ₹ 1,000

W.D.V. on 01.04.2016 = ₹ 9,000

Less: Dep for 2016-17 for 3 months = ₹ 250

W.D.V. on 01.07.2016 = ₹ 8,750

Less: Selling price = ₹ 7,000

∴ Loss on sale of machinery = ₹ 1,750