Question

Kaushik Corporation has purchased machine for ₹ 1,24,000 on 1-4-’12. The carriage and installation expense of this machine was ₹ 16,000. The repairing expense of ₹ 20,000 was incurred before putting this machine for production. On 1-10-’13 second machine was purchased for ₹ 1,36,000, its installation expense was of ₹ 8000. First machine was sold on 30-9-’14 at 40 % loss of book value.

Prepare machines account up to 31-3-’15 and show its accounting effect in the annual accounts of 2012-’13. Company provides depreciation on machines at 10% every year under straight-line method.

Answer 1

Cost price of machine on 1 -4-’12 = ₹ 1,24,000 + ₹ 16,000 + ₹ 20,000 = ₹ 1,60,000
Annual depreciation on first machine = ₹1,60,000 × 10 / 100 = ₹ 16,000

Cost price of second machine purchased on 1 – 10 -13 = ₹ 1,36,000 + ₹ 8,000 = ₹ 1,44,000
∴Annual depreciation on second machine =  ₹ 1,44,000 × 10 / 100 = ₹ 14,400
∴ Depreciation for six months from 1- 10-’13 to 31-3-14 =  ₹ 14,400 × 6 / 12 = ₹ 7,200

Selling price of first machine: