M/s. Surya Prakash purchased a second-hand machine on 1st April, 2022 for ₹ 1,60,000. Overhauling and erection charges amounted to ₹ 40,000. Another…
CA Foundation · Accounting · MTP · September 2026
M/s. Surya Prakash purchased a second-hand machine on 1st April, 2022 for ₹ 1,60,000. Overhauling and erection charges amounted to ₹ 40,000. Another machine was purchased for ₹ 80,000 on 1st October, 2022. On 1st October, 2024, the machine installed on 1st April, 2022 was sold for ₹ 1,00,000. Another machine for ₹ 30,000 was purchased and was installed on 31st December, 2024. Under the existing practice the company provides depreciation @ 10% p.a. on original cost. However, from 1st April,2025 it decided to adopt WDV method and to charge depreciation @ 15% p.a. You are required to prepare Machinery account for the years 1st April, 2022 to 31st March, 2026.
Suggested Answer and Working Notes:
In the books of M/s. Surya Prakash Machinery Account Date Particulars Amount ₹ Date Particulars Amount ₹ 1.4.2022 To Bank A/c 1,60,000 31.03.2023 By Depreciation A/c 24,000 To Bank A/c (Erection charges) 40,000 (₹ 20,000 + ₹ 4,000) 31.03.2023 By Balance c/d 2,56,000 1.10.2022 To Bank A/c 80,000 (₹ 1,60,000 + ₹ 76,000) 2,80,000 2,80,000 1.4.2023 To Balance b/d 2,56,000 31.03.2024 By Depreciation A/c 28,000 (₹ 20,000 + ₹ 8,000) 31.03.2024 By Balance c/d 2,28,000 (₹ 1,60,000 + ₹ 68,000) 2,56,000 2,56,000 1.4.2024 To Balance b/d 2,28,000 1.10.2024 By Bank A/c 1,00,000 31.12.2024 To Bank A/c 30,000 1.10.2024 By Profit and Loss A/c (Loss on Sale W.N. 1) 50,000 31.03.2025 By Depreciation A/c 18,750 (₹ 10,000 + ₹ 8,000 + ₹ 750) 31.03.2025 By Balance c/d 89,250 (₹ 60,000 + ₹ 29,250) 2,58,000 2,58,000 1.4.2025 To Balance b/d 89,250 31.3.2026 By Depreciation A/c 13,387.5 (₹ 9,000 + 4,387.5) 31.3.2026 By Balance c/d 75,862.5 (₹ 51,000 + ₹ 24,862.5) 89,250 89,250 Working Notes: Book Value of machines (Straight line method) Machine I ₹ Machine II ₹ Machine III ₹ Cost 2,00,000 80,000 30,000 Depreciation for 2022-23 (20,000) (4,000) Written down value as on 31.03.2023 1,80,000 76,000 Depreciation for 2023-24 (20,000) (8,000) Written down value as on 31.03.2024 1,60,000 68,000 Depreciation for 2024-25 (Mach I- 6 months) (10,000) (8,000) (750) Written down value as on 01.10.2024 1,50,000 Written down value as on 31.03.2025 60,000 29,250 Sale proceeds (1,00,000) Loss on sale 50,000
Topics: Depreciation and Amortisation
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