The Machinery Account of a Factory showed a balance of 95 Lakhs on 1st April, 2024. The Books of Accounts Depreciation is written off of the Factory…

CA Foundation · Accounting · MTP · January 2026
The Machinery Account of a Factory showed a balance of 95 Lakhs on 1st April, 2024. The Books of Accounts Depreciation is written off of the Factory are closed on 31st March every year and @10% per annum under the Diminishing Balance Method. On 1st September, 2024 a new machine was acquired at a cost of 14 Lakhs and - 44,600 was incurred on the same day as installation charges for erecting the machine. On 1st September, 2024 a machine which had cost - 21,87,000 on 1st April, 2022 was sold for 3,75,000. Another machine which had cost - 21,85,000 on 1st April, 2023 was scrapped on 1st September, 2024 and it realized nothing. Prepare Machinery Account for the year ended 31st March, 2025. Allow the same rate of depreciation as in the past and calculate depreciation to the nearest multiple of a rupee. Also show all the necessary working notes.

Suggested Answer and Working Notes:

Plant and Machinery Account for the year ended 31st March, 2025 Particulars ₹ ₹ 01-04-24 To Balance b/d 95,00,000 01-09-24 By Bank (Sales) 3,75,000 01-09-24 To Bank (₹ 14,00,000+44,600) 14,44,600 01-09-24 By Depreciation (on sold machine) 73,811 01-09-24 By Loss on sale of machine 13,22,659 01-09-24 By Loss on scrapping the machine 18,84,562 01-09-24 By Depreciation (on Scrapped machinery) 81,938 31-03-25 By Depreciation (Note iii) 6,60,471 31-03-25 By Balance c/d 65,46,159 1,09,44,600 1,09,44,600 Working Note: (i) Calculation of loss on sale of machine on 01-09-2024 Particulars ₹ Cost on 1-4-2022 21,87,000 Less: Depreciation @10% on 21,87,000 (₹ 2,18,700) W.D.V. on 31-03-2023 19,68,300 Less: Depreciation @10% on 19,68,300 (₹ 1,96,830) W.D.V. on 31-03-2024 17,71,470 Less: Depreciation @10% on 17,71,470 for5 months (73, 811) WDV on 1-9-2024 16,97,659 Less: Sale proceeds on 01-09-2024 (₹ 3,75,000) Loss 13,22,659 (ii) Calculation of loss on scrapped machine Particulars ₹ Cost on 1-4-2023 21,85,000 Less: Depreciation @10% on 21,85,000 (₹ 2,18,500) W.D.V. on 31-3-2024 19,66,500 Less: Depreciation @10% on 19,66,500 for5 months (81, 938) Loss 18,84,562 (iii) Depreciation Particulars ₹ Balance of machinery account on 1-4-2024 95,00,000 Less: W.D.V of machinery sold 17,71,470 W.D.V. of machinery scrapped 19,66,500 (₹ 37,37,970) Balance of other machinery after sale and scrap on 1-4-2024 57,62,030 Depreciation @10% on 57,62,030 for12 months 5,76,203 Depreciation @10% on 14,44,600 for7 months 84,268 6,60,471 Note: The figures are rounded off to nearest rupee.

Topics: Depreciation and Amortisation

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