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Machine 1

Debit
Date Particulars Amount Date Particulars
1-Apr-07 Cash 300000.00

31-Mar-03 Balance c/d

Machine 2
Date Particulars Amount Date Particulars
1-Oct-07 Cash 200000.00

31-Mar-03 Balance c/d

Depreciation Expense
Date Particulars Amount Date Particulars
31-Mar-08 Accumulated Depreciation 60000.00

31-Mar-03 Balance c/d

Cash
Date Particulars Amount Date Particulars
1-Apr-07 Machine 1
1-Oct-07 Machine 2
31-Mar-03 Balance c/d 500000

Accumulated Depreciation
Date Particulars Amount Date Particulars
31-Mar-03 Depreciation Expense

31-Mar-03 Balance c/d 6000

Machine 1
Debit
Date Particulars Amount Date Particulars
1-Apr-03 Balance b/d 300000.00 1-Jan-04 Cash
1-Jan-04 Loss on sale of machinery
1-Jan-04 Accumulated Depreciation
31-Mar-04 Balance c/d

Machine 2
Date Particulars Amount Date Particulars
1-Apr-03 Balance b/d 200000.00

31-Mar-04 Balance c/d

Depreciation Expense
Date Particulars Amount Date Particulars
1-Apr-03 Balance b/d 60000.00
1-Apr-04 Accumulated Depreciation 7,500
31-Mar-04 Balance c/d

Cash
Date Particulars Amount Date Particulars
1-Apr-03 Balance b/d
1-Jan-04 Machinery 1 30,000 1-Jul-08 Machine 3
Balance c/d 570000 31-Mar-04

Accumulated Depreciation
Date Particulars Amount Date Particulars
1-Jan-04 Machinery 1 1,500 1-Apr-03 Balance b/d
1-Apr-04 Depreciation Expense
31-Mar-04 Balance c/d 12000

Machine 3
Date Particulars Amount Date Particulars
1-Jul-08 Cash 100000

31-Mar-04 Balance c/d


Credit
Amount

300000

Amount

200000

Amount

60000

Amount
300000.00
200000.00

Amount
6000.00

Credit
Amount
30,000
55,000
15,000
200000

Amount

200000

Amount

67500

Amount
500000.00
100000.00

Amount
6000.00
7500.00

Amount

100000
Effect of change in depreciation method

Case 1: 20% CPM changed to 15% DBM in 2009 with retrospective effect from 2007

Cost Price method


Date Item Amount Months Rate Depreciation Net Value
Jan-07 Machine 1 200,000 9 20 30000 170,000
Jan-07 Machine 2 200,000 3 20 10000 190,000

Jan-08 Machine 3 100,000 6 20 10000 90,000


Jan-08 Machine 1 200,000 12 20 40000 130,000
Jan-08 Machine 2 200,000 12 20 40000 150,000

Jan-09 Machine 3 100,000 12 20 20000 70,000


Jan-09 Machine 1 200,000 12 20 40000 90,000
Jan-09 Machine 2 200,000 12 20 40000 110,000
Total Depreciation 230000

Diminishing Balance method


Date Item Amount Months Rate Depreciation Net Value of Asset
Jan-07 Machine 1 200,000 9 15 22500 177,500
Jan-07 Machine 2 200,000 3 15 7500 192,500

Jan-08 Machine 3 100,000 6 15 7500 92,500


Jan-08 Machine 1 177,500 12 15 26625 150,875
Jan-08 Machine 2 192,500 12 15 28875 163,625

Jan-09 Machine 3 92,500 12 15 13875 78,625


Jan-09 Machine 1 150,875 12 15 22631.25 128,244
Jan-09 Machine 2 163,625 12 15 24543.75 139,081
Total Depreciation 154050

Net Impact on Financial Statements -75,950


75,950 needs to be credited to the P/L account
Case 2: 20% DBM chaged to 15% CPM in 2009 with retrospective effect from 2007

Diminishing Balance Method


Date Item Amount Months Rate Depreciation
Net Value
Jan-07 Machine 1 200,000 9 20 30000 170,000
Jan-07 Machine 2 200,000 3 20 10000 190,000

Jan-08 Machine 3 100,000 6 20 10000 90,000


Jan-08 Machine 1 170,000 12 20 34000 136,000
Jan-08 Machine 2 190,000 12 20 38000 152,000

Jan-09 Machine 3 90,000 12 20 18000 72,000


Jan-09 Machine 1 136,000 12 20 27200 108,800
Jan-09 Machine 2 152,000 12 20 30400 121,600
Total Depreciation 197600

Cost Price Method


Date Item Amount Months Rate Depreciation
Net Value
Jan-07 Machine 1 200,000 9 15 22500 177,500
Jan-07 Machine 2 200,000 3 15 7500 192,500

Jan-08 Machine 3 100,000 6 15 7500 92,500


Jan-08 Machine 1 200,000 12 15 30000 147,500
Jan-08 Machine 2 200,000 12 15 30000 162,500

Jan-09 Machine 3 100,000 12 15 15000 77,500


Jan-09 Machine 1 200,000 12 15 30000 117,500
Jan-09 Machine 2 200,000 12 15 30000 132,500
Total Depreciation 172500

Net Impact on Financial Statements -25,100


25,100 needs to be debited to the P/L account
Case 3: 15% CPM changed to 20% DBM in 2009 with immediate effect

Cost Price Method


Date Item Amount Months Rate Depreciation
Net Value
Jan-07 Machine 1 200,000 9 15 22500 177,500
Jan-07 Machine 2 200,000 3 15 7500 192,500

Jan-08 Machine 3 100,000 6 15 7500 92,500


Jan-08 Machine 1 200,000 12 15 30000 147,500
Jan-08 Machine 2 200,000 12 15 30000 162,500

Jan-09 Machine 3 100,000 12 15 15000 77,500


Jan-09 Machine 1 200,000 12 15 30000 117,500
Jan-09 Machine 2 200,000 12 15 30000 132,500
Total Depreciation 172500

Diminishing Balance Method


Date Item Amount Months Rate Depreciation
Net Value
Jan-09 Machine 3 92,500 12 20 18500 74,000
Jan-09 Machine 1 147,500 12 20 29500 118,000
Jan-09 Machine 2 162,500 12 20 32500 130,000
Total Depreciation 178000

Net Impact on Financial Statements 5,500


-5,500 needs to be credited to the P/L account
Date Account Name Debit Credit
1-Apr-07 Machine 1 300,000
Cash 300,000

1-Oct-07 Machine 2 200,000


Cash 200,000

31-Mar-08 Depreciation Expense 60000.00


Accumulated Depreciation 60000.00

1-Jul-08 Machine 3 100,000


Cash 100,000

1-Jan-09 Accumulated Depreciation 15000


Cash 30,000
Machine 1 (sold) 100,000
Loss on sale of Machinery 55,000.00

31-Mar-09 Depreciation Expense 75000


Accumulated Depreciation 75000