Machinery was purchased on 1-1--2016 for rs 40000.on 30th June , anoth...
Calculation of Machinery Account after Depreciation
Initial Purchase of Machinery on 1-1-2016
- Machinery purchased on 1-1-2016 for Rs. 40,000
- Depreciation for the year 2016 = 10% of Rs. 40,000 = Rs. 4,000
- Written down value as of 1-1-2017 = Rs. 40,000 - Rs. 4,000 = Rs. 36,000
Second Machine Purchase and Repairs on 30th June
- Another machine purchased on 30th June for Rs. 15,000
- Repairs cost incurred for Rs. 5,000
- Total cost of new machine = Rs. 15,000 + Rs. 5,000 = Rs. 20,000
- Depreciation for the year 2017 = 10% of Rs. 36,000 = Rs. 3,600
- Written down value as of 30th June 2017 = Rs. 36,000 - Rs. 3,600 = Rs. 32,400
Sale of Second Machine on 30th June 2017
- Second machine sold for Rs. 15,000
- Book value of the second machine on the date of sale = Rs. 32,400
- Profit/(Loss) on the sale = Sale price - Book value = Rs. 15,000 - Rs. 32,400 = (Rs. 17,400)
Final Machinery Account after Depreciation
- Opening balance (1-1-2017) = Rs. 36,000
- Add: Purchases and repairs = Rs. 20,000 + Rs. 5,000 = Rs. 25,000
- Less: Depreciation for 2017 = Rs. 3,600
- Less: Loss on sale of second machine = Rs. 17,400
- Closing balance (30-6-2017) = Rs. 40,000 - Rs. 4,000 - Rs. 3,600 - Rs. 17,400 = Rs. 15,000
By following the above calculations, we have determined the machinery account after allowing for depreciation of 10% per annum on the written down value.