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Question -

On January 01, 2014, a Limited Company purchased machinery for Rs 20,00,000. Depreciation is provided @15% p.a. on diminishing balance method. On March 01, 2016, one fourth of machinery was damaged by fire and Rs 40,000 were received from the insurance company in full settlement. On September 01, 2016 another machinery was purchased by the company for Rs 15,00,000.

Write up the machinery account from 2016 to 2017. Books are closed on December 31, every year.



Answer -

Machinery Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2016

 

 

 

2016

 

 

 

Jan.01

Balance b/d (i)

(10,83,750 + 3,61,250)

 

14,45,000

Mar.01

Depreciation (1/4 Machine

for 2 Months)

 

9,031

Sep.01

Bank (ii)

 

15,00,000

Mar.01

Bank

 

40,000

 

 

 

 

Mar.01

Profit and Loss

 

3,12,219

 

 

 

 

Dec.31

Depreciation (i)

 

 

 

 

 

 

 

(i) 1,62,563 (3/4th of  machine),

(ii) 75,000

 

2,37,563

 

 

 

 

Dec.31

Balance c/d

 

 

 

 

 

 

 

(i) 9,21,187, (ii) 14,25,000

 

23,46,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,45,000

 

 

 

29,45,000

 

 

 

 

 

 

 

 

2017

 

 

 

2017

 

 

 

Jan.01

Balance b/d

 

 

Dec.31

Depreciation

 

 

 

(i) 9,21,187, (ii) 14,25,000

 

23,46,187

Dec.31

(i) 1,38,177, (ii) 2,13,750

 

3,51,927

 

 

 

 

 

Balance c/d

 

 

 

 

 

 

 

(i) 7,83,009, (ii) 12,11,250

 

19,94,260

 

 

 

23,46,187

 

 

 

23,46,187

 

 

 

 

 

 

 

 

 

 Working Note:

 

Machine (i)

 

 

 

 

 

 

Years

January 01

 

Depreciation

(15% p.a.)

=

Closing Balance

2014

20,00,000

–

3,00,000

=

17,00,000

2015

17,00,000

–

2,55,000

=

14,45,000

2016

14,45,000

 

 

 

 

 

1/4th of Machine (i)

 

 

 

 

 

 

Years

Opening Balance

 

Depreciation

 (15% p.a.)

=

Closing Balance

2014

5,00,000

–

75,000

=

4,25,000

2015

4,25,000

–

63,750

=

3,61,250

2016

3,61,250

–

9,031 (2 months)

=

3,52,219

 

Value on 1 Mar. 2016

=

3,52,219

Insurance Claim

=

40,000

Loss

 

Rs 3,12,219

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