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A company whos accounting year is a financial year, purchased on 1 july , 2016 machinery costing rs 90 000 . it purchased further machinery on 1 jan , 2017 costing rs 60 000 and on 1 oct , 2017 costing 30000 . On 1 april , 2018 one third of the machine installed on 1 july , 2016 became obsolete and was sold for rs 90 000. Show how machinery account would appear in the books of company for 3 years ending 31 march ,2019 if depreciation is charged by 15% p.a. on diminishing balance method?
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A company whos accounting year is a financial year, purchased on 1 jul...
Calculation of Depreciation

To calculate the depreciation on the machinery, we will use the diminishing balance method. This method calculates depreciation based on the reducing balance of the asset's value. The formula to calculate annual depreciation is:

Depreciation = (Cost of Asset - Accumulated Depreciation) * Depreciation Rate

In this case, the depreciation rate is 15% per annum.

Machinery Account for the Financial Year 2016-2017

Purchase of Machinery on 1 July, 2016:
- Machinery purchased: Rs 90,000
- Depreciation for the period: Rs 90,000 * 15% = Rs 13,500
- Accumulated Depreciation: Rs 13,500

Machinery Account for the Financial Year 2017-2018

Purchase of Machinery on 1 January, 2017:
- Machinery purchased: Rs 60,000
- Depreciation for the period: Rs 60,000 * 15% = Rs 9,000
- Accumulated Depreciation: Rs 13,500 + Rs 9,000 = Rs 22,500

Purchase of Machinery on 1 October, 2017:
- Machinery purchased: Rs 30,000
- Depreciation for the period: Rs 30,000 * 15% = Rs 4,500
- Accumulated Depreciation: Rs 22,500 + Rs 4,500 = Rs 27,000

Machinery Account for the Financial Year 2018-2019

Obsolete Machinery Sold on 1 April, 2018:
- Cost of machinery sold: Rs 90,000
- Accumulated Depreciation: Rs 27,000
- Depreciation on sold machinery: Rs 27,000 * (9/12) = Rs 20,250
- Book value of machinery sold: Rs 90,000 - Rs 20,250 = Rs 69,750
- Cash received from sale: Rs 90,000
- Profit on sale: Rs 90,000 - Rs 69,750 = Rs 20,250

Summary of Machinery Account for the Financial Year 2018-2019:
- Opening balance: Rs 27,000
- Purchases: Rs 0
- Depreciation: Rs 0
- Closing balance: Rs 0

Summary of Machinery Account for the Financial Year 2019-2020:
- Opening balance: Rs 0
- Purchases: Rs 0
- Depreciation: Rs 0
- Closing balance: Rs 0

Summary of Machinery Account for the Financial Year 2020-2021:
- Opening balance: Rs 0
- Purchases: Rs 0
- Depreciation: Rs 0
- Closing balance: Rs 0

Conclusion

In the books of the company, the Machinery Account would appear as follows for the 3 years ending 31 March, 2019:

Financial Year 2016-2017:
Machinery Account
- Opening balance: Rs 0
- Purchases: Rs 90,000
-
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A company whos accounting year is a financial year, purchased on 1 july , 2016 machinery costing rs 90 000 . it purchased further machinery on 1 jan , 2017 costing rs 60 000 and on 1 oct , 2017 costing 30000 . On 1 april , 2018 one third of the machine installed on 1 july , 2016 became obsolete and was sold for rs 90 000. Show how machinery account would appear in the books of company for 3 years ending 31 march ,2019 if depreciation is charged by 15% p.a. on diminishing balance method?
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A company whos accounting year is a financial year, purchased on 1 july , 2016 machinery costing rs 90 000 . it purchased further machinery on 1 jan , 2017 costing rs 60 000 and on 1 oct , 2017 costing 30000 . On 1 april , 2018 one third of the machine installed on 1 july , 2016 became obsolete and was sold for rs 90 000. Show how machinery account would appear in the books of company for 3 years ending 31 march ,2019 if depreciation is charged by 15% p.a. on diminishing balance method? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A company whos accounting year is a financial year, purchased on 1 july , 2016 machinery costing rs 90 000 . it purchased further machinery on 1 jan , 2017 costing rs 60 000 and on 1 oct , 2017 costing 30000 . On 1 april , 2018 one third of the machine installed on 1 july , 2016 became obsolete and was sold for rs 90 000. Show how machinery account would appear in the books of company for 3 years ending 31 march ,2019 if depreciation is charged by 15% p.a. on diminishing balance method? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company whos accounting year is a financial year, purchased on 1 july , 2016 machinery costing rs 90 000 . it purchased further machinery on 1 jan , 2017 costing rs 60 000 and on 1 oct , 2017 costing 30000 . On 1 april , 2018 one third of the machine installed on 1 july , 2016 became obsolete and was sold for rs 90 000. Show how machinery account would appear in the books of company for 3 years ending 31 march ,2019 if depreciation is charged by 15% p.a. on diminishing balance method?.
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