A firm purchased a second-hand machinery on 1st April, 2023 for ₹ 30,00,000 subsequent to which ₹ 4,00,000 were spent on its repairs and…

Machinery Account Date Particulars Amount (₹) Date Particulars Amount (₹) 2025 2025 April 1 To Bal b/d- Oct. 1 By Depreciation- on machinery 1 sold 2,63,296 Machine 1 26,32,960 Oct. 1 By Bank – machinery 1 sold 5,00,000 Machine 2 15,22,048 41,55,008 Oct. 1 By Profit & Loss- Loss on Sale of machinery (WN. 1) 18,69,664 Oct. 1 To Bank A/c (Machine 3) 17,00,000 2026 Mar. 31 By Depreciation (WN. 2) Machine 2 3,04,410 Machine 3 82,000 3,86,410 Mar. 31 By bal c/d 28,35,638 58,55,008 58,55,008 Working Note 1: Calculation of depreciation and Profit/loss on sale: Machine 1 purchased on 1st April, 2023 (₹) Machine 2 purchased on 1st October, 2023 (₹) Total (₹) Cost of Purchase 30,00,000 18,00,000 4,00,000 40,000 Total Cost 34,00,000 18,40,000 Less: Depreciation @ 12% Machine 1 (12 months) (4,08,000) Machine 2 (6 months) (1,10,400) 5,18,400 W.D.V. on 31-3-2024 29,92,000 17,29,600 Less: Depreciation @ 12% (3,59,040) (2,07,552) 5,66,592 W.D.V. on 31-3-2025 26,32,960 15,22,048 Less: Depreciation on SLM Basis (WN. 2) (2,63,296) (3,04,410) 5,67,706 23,69,664 12,17,638 Less: Sale proceeds on 1-10-2025 (5,00,000) Loss on sale of machinery 18,69,664 Working Note 2: Calculation of Depreciation on the basis of Straight-line method with effect from April 1,2025 Machine 1 (purchased on 1st April,2025) = 34,00,000 - 4,08,000 - 3,59,040 = 26,32,960 / 5 = 5,26,592 / 2 = 2,63,296 Machine 2 (purchased on 1st October, 2023) = 18,40,000 – 1,10,400 - 2,07,552 = 15,22,048 / 5 = 3,04,410 Machine 3 (purchased on 1st Oct,2025) = (17,00,000 - 60,000) / 10 = 1,64,000 / 2 = ₹ 82,000 Note: Freight incurred on Machinery purchased on 1st April,2023 is to be excluded from the cost of machinery since this cost is incurred only for shifting the machinery to the new plant and does not increase the operating capacity of the machinery.