A company whose accounting year is calendar year purchase a machine fo...
Machine Account
Purchase of Machine on 1st July 2013:
- Date: 1st July 2013
- Amount: ₹30,000
Purchase of Machine on 1st January 2014:
- Date: 1st January 2014
- Amount: ₹20,000
Purchase of Machine on 1st October 2014:
- Date: 1st October 2014
- Amount: ₹10,000
Depreciation Calculation:
- Depreciation Rate: 10% per annum (reducing balance method)
Year 2013:
- No depreciation as the first machine was purchased on 1st July 2013.
Year 2014:
- Depreciation for the first machine: ₹30,000 * 10% = ₹3,000
Year 2015:
- Depreciation for the first machine: ₹27,000 * 10% = ₹2,700
Sale of Machine on 1st April 2015:
- Date: 1st April 2015
- Sold 1/3rd of the machine purchased on 1st July 2013 for ₹3,000
Machine Account Summary:
- Opening Balance (1st January 2013): ₹0
- Purchase of Machine on 1st July 2013: ₹30,000
- Purchase of Machine on 1st January 2014: ₹20,000
- Purchase of Machine on 1st October 2014: ₹10,000
- Depreciation for the year 2014: ₹3,000
- Depreciation for the year 2015: ₹2,700
- Sale of Machine on 1st April 2015: ₹3,000
Machine Account Calculation:
- Opening Balance: ₹0
- 1st July 2013: ₹30,000 (Purchase)
- 1st January 2014: ₹20,000 (Purchase)
- 1st October 2014: ₹10,000 (Purchase)
- 31st December 2014: ₹3,000 (Depreciation)
- 31st December 2015: ₹2,700 (Depreciation)
- 1st April 2015: ₹3,000 (Sale)
- Closing Balance: ₹71,700 (₹30,000 + ₹20,000 + ₹10,000 - ₹3,000 - ₹2,700 - ₹3,000)
The Machine Account shows the purchase of machines on different dates and the calculation of depreciation each year. The depreciation is calculated at a rate of 10% per annum using the reducing balance method. The first machine, purchased on 1st July 2013, did not incur any depreciation in the first year. In the subsequent years, the depreciation is calculated based on the reduced value of the machine. On 1st April 2015, 1/3rd of the machine purchased on 1st July 2013 was sold for ₹3,000. The closing balance of the Machine Account after 3 years is ₹71,700.
A company whose accounting year is calendar year purchase a machine fo...
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