Question

On 01.04.2009, a company purchased Machinery for Rs. 60,000. 

On 30.09.2011, a part of the Machinery which was purchased on 01.04.2009 costing Rs.10,000 was sold for Rs. 7,000. On 01.04.2012 new Machinery was purchased for Rs. 20,000. Depreciation was charged at 10% p.a. on straight line method. Accounts are closed on 31st March every year. Show Machinery a/c and Depreciation A/c for the period ending 31.03.2013.

Answer 1

Calculation of P/L on the sale of the part of the Machinery

Cost-	10,000
(1.4.2009)
(-) Depreciation (10000 x 10%)	1,000
1.4.2010	9,000
(-) Depreciation (1000 x 10%)	1,000
1.4.2011	8,000
(-) Depreciation upto 30.9.2011 (10000 x 10% x 6/12)	500
Book value	7,500
Sold	7,000
Loss	500
Diminishing balance method;