Years Depreciation

Cost 200000 1 38000

Life 5 2 38000
Scrap 10000 3 38000
4 38000
190000 5 38000
Book Value 190000 190000

Asset
Historical
Depreciation 38000 Cost 200,000
Less:
acc.Depr 190,000
Value at the
end of the 5th
year Original cost - Depreciation 10000
Less Scrap
0 Value 10,000
Book
Value 0
 Chart Title
40000

35000

30000

25000

20000

15000

10000

5000

0
1 2 3 4 5
 MODEL ENTRIES
Date Particulars L/F Debit Credit

1 When an asset is Purchased

Asset A/C Dr. XXX
To Bank A/C XXX
(Being Asset Purchased)

2 When installation Charges are paid

Asset A/C Dr. XXX Installation Charges are capitalised
Capitalisation of Installation charges
means the expenses is added to the Asset
To Bank A/C XXX
(Being installation charges
paid) When an Asset is sold The P/L is calculated as below
P/L will be = Cost of the Machine + Installation
Charges+ Depreciatuon on that Machine- Sale value

If the Sale value is less than the cost (as calculated

3 When Depreciation is charged Above) there will bea loss & vice Versa
Depreciation A/C Dr. XXX
To Asset A/C XXX
(Being depreciation
charged)

4 Depreciaton is transferred to P/L A/C

P/L A/C Dr. XXXX
To Depreciation A/C XXX
(Beding depreciation
transferred to P/L A/C

5 When an Asset is sold

Bank A/C Dr. XXX
To Asset A/C XXX
(Being Asset sold)

6 When P/L on asset is earned

Asset A/C Dr. XXX
To P/L A/C XXX
Being profit earned on sale of Asset)

7 REVERSE ENTRY FOR LOSS INCURRED ON SALE

 calculated as below
e + Installation
Machine- Sale value

cost (as calculated

e Versa
 Journal Entries of Sahdev Company Limited Ledge

Date Particulars L/F Debit Credit Date

2003 2003
Jan.01 Machinery A/C (1) Dr. 100,000 Jan.01
To Bank A/C 100,000 Jan.01
(Being Machinery
purchased Jul 01.
Jan.01 Machinery A/C Dr. 8,000 Dec-01
To Bank A/C 8,000
(Being Installation
Charges Paid) 2004
Jul-01 Machinery A/C (2) Dr. 40,000 1-Jan
To Bank A/C 40,000

(Being additional Machine

Purchased)
Oct-01 Bank A/C Dr. 40,000
To Machinery A/C 40000 2005
(Being Machinery (2) sold) Jan-01
Dec.31 Depreciation A/C Dr 11,800
To Machinery A/C 11,800

(Being Depreciation
Charged at 10% on SLM
SEE W.NOTE of 2003) 2006
Dec.31 P/L A/C Dr. 11,800 Jan-01
To Depreciation A/C 11,800

(Being Depreciation
charged transferred to P/L
A/C)
Dec. 31 Machinery A/C Dr. 1,000
To Profit &Loss A/C 1,000
(Being Profit on Sales of
the Machine sold
recorded; SEE P/L
CALCULATION)
(Being Depreciation for
the year transferred to
P/LA/C)
2004
Dec. 31 Depreciation A/C Dr 10,800
To Machinery A/C 10,800
 (Being Depreciation
Charged at 10% on SLM
SEE W.NOTE of 2004)
Dec. 31 P/L A/C Dr. 10,800
To Depreciation A/C 10,800

(Being Depreciation
charged on Machine 1
transferred to P/L A/C, SEE
W.N. of 2004)
2005
Dec-31 Depreciation A/C Dr 10,800
To Macinery A/C 10,800

(Being Depreciation
Charged at 10% on SLM
SEE W.NOTE of 2005)
Dec-31 P/L A/C Dr. 10,800
To Depreciation A/C 10,800

(Being Depreciation
charged on Machine 1
transferred to P/L A/C, SEE
W.N. of 2004)
 From the books of a
Ledger of Sahdev Company Limited
Machinery A/C 1.  Purchased a Machine o

2.       Purchase of Machinery

Particulars J/F Amount Date Particulars J/F Amount
2003 3.       Sale of above Machiner
To Bank A/C (1) 100,000 Oct. 01 By,Bank A/C (sale) 40,000 The original cost of machin
ToBank A/C (I.CGRS) 8,000 4.       Installation charges of R

5.       Machinery is being dep

ToBank A/C (2) 40,000 31 dec. ByDepreciation A/C 11,800
To P/L A/C 1,000 31-Dec BY, ,Balance c/d 97,200 Prepare Machinery account
149,000 149,000

2004
ToBalance b/d 97,200 31-Dec By Depreciation A/C 10,800
31-Dec By, Balance c/d 86400

97,200 97,200

2005
ToBalance b/d 86,400 Dec-31 By, Depreciation A/C 10,800
Dec-31 By Balance c/d 75600
86,400 86,400

2006
To Balance b/d 75,600

P/L on Sale
Original Cost 40,000 40000

Less: Depreciation 1,000 1000

ADD: Installation Charges 0 41000

Less: Sale Value 40,000 -32000
41,000 9000
Less Cost of the machine 40,000
PROFIT 1,000
 From the books of a Sahdev Limited Company, the following details regarding its machinery account are available:

1.  Purchased a Machine on January 1,2003 Rs. 1,00,000

2.       Purchase of Machinery on July 1, 2003 Rs. 40,000

3.       Sale of above Machinery as was damaged in an accident on October 1, 2003 Rs. 32,000
st
The original cost of machinery sold was Rs. 40,000 on 1 July, 2000.
4.       Installation charges of Rs. 8,000 on Purchase of new machinery on 1Jan.2003

5.       Machinery is being depreciated at 10% per annum on fixed installment basis.

Prepare Machinery account for 2003, 2004,2005 in the books of the Limited Company.

DEPRECIATION A/C
Date Particulars J/F Amount Date Particulars J/F
2003 2003

31-Dec To Machinery A/C 11,800 31-Dec By, P/LA/C

11,800
2004 2004
31-Dec To Machinery A/C 10,800 31-Dec BY P/L A/C

10,800
2005 2005
31-Dec To Machinery A/C 10,800 31-Dec By P/LA/C

10,800

10,800

Working Notes
Year Macxhinery No TOTAL
1 2
2003 108000*10% 40,000*10%*3/12
10,800 1000 11,800
2004 1,08,000*10%

10,800 0 10,800
2005 1,08,000*10%
10,800NIL (Machine is sold) 10,800
nery account are available:

Amount

11,800

11,800

10,800

10,800

10,800

10,800

10,800
Working Notes
Year Macxhinery No TOTAL
1 2
2003 108000*10% 40,000*10%*3/12
10,800 1000 11,800
2004 1,08,000*10%
10,800 0 10,800
2005 1,08,000*10%
10,800 NIL (Machine is sold) 10,800

P/L on Sale
Original Cost 40,000
Less: Depreciation 1,000
ADD: Installation Charges 0
Less: Sale Value 40,000
41,000
Less Cost of the machine 40,000
PROFIT 1,000
 Machinery Account
Date Particulars J/F Amount Date Particulars J/F
2001-02 2001-02
April 01, 2001 To Bank A/C ( A-1) 60,000 Mar 31,2002 By Depreciation A/C
(SeeW.Note of 01-02)
Mar 31,2002 By Balance c/d

60,000
2002-03 2002-03
April 1,2002 ToBalance b/d 54,000 Mar 31, 2003 By Depreciation A/C
Oct 01, 2002 ToBank A/C (B-1) 30,000 (See W.Note of 02-03)
Jan 01, 2003 To Bank A/C (B - 2) 40,000

Mar31,03' By Balance b/d

124,000
2003-04 2003-04
April, 1,2003 To Balance b/d 115,500
Oct 01, 2003 ToBank A/C (C - 1) 60,000 Oct 01, 2003 By Bank A/C (A-1 sold)
By Depreciation
Mar 31, 2004 ToBank A/C (D - 1) 100,000 oct 1,03' A/C( Depn on A-1 sold)
Oct 1,03' ToP/L A./C 5,000 31Mar,04' By Depreciation A/C
31 Mar, 04' By Balance c/d
280,500
2004-05 2004-05
April1,2004 To balance b/d 217,500

Profit & Loss on Sales

Depreciation 01-02 6000
Depreciation 02-03 6000
Depreciation03-04 3000
Add: Sale Value 50000
65,000
Leess: original Cost -60,000
Profit 5,000
 The following Plant and Machinery were purchased by Sita & Co.
Amount
Date Specification of the Machine Amount Rs.
6,000 1-4-2001 A–1 60,000
1-10-2002 B–1 30,000
54,000 1-1-2003 B–2 40,000
1-10-2003 C–1 60,000
60,000 31-3-2004 D–1 1,00,000
Please prepare Machinery Account in the ledger of Sita & Co. for the years 2001 – 2002, 2002-2003
yearafter considering the following point
8,500

He sold Machine No. A – 1 on 1-10-2003 for Rs. 50,000.

115,500 Depreciation is charged at 10% on the original value per annum.
124,000

50,000 Year A-1 April 1, 2001 B-1 ( Oct 01, 2002

3,000 2001-02 60000*10/100*12/12

10,000 6000 N.A
217,500
280,500
2002-03 60000*10/100*12/1230000*10/100*6/12
63,000 6,000 1,500

2003-04
April 01, sold on Oct 1, 2003
60,000*10/100*6/12 30,000*10/100*12/12
3,000 3,000
o. for the years 2001 – 2002, 2002-2003 and 2003-2004 assuming the year ends on 31st March every
yearafter considering the following points:

TOTAL
B-2 (Jan 01, 2003) C- 1 (Oct 01. 2003) D-1 Mar 31, 2003

N.A N.A N.A 6,000

40000*10/100*3/12
1,000 N.A N.A 8,500

60,000 100,000

40,000*10/100*12/1260,000*10/100*6/12 1,00,000*10/100*0/12
4,000 3,000 0 13,000
Year A-1 April 1, 2001 B-1 ( Oct 01, 2002 B-2 (Jan 01, 2003) C- 1 (Oct 01. 2003)
2001-02 60000*10/100*12/12
6000 N.A N.A N.A

2002-03 60000*10/100*12/12 30000*10/100*6/12 40000*10/100*3/12

6,000 1,500 1,000 N.A

2003-04 60,000
April 01, sold on Oct 1, 2003
60,000*10/100*6/12 30,000*10/100*12/12 40,000*10/100*12/12 60,000*10/100*6/12
3,000 3,000 4,000 3,000
 The following Plant and Machin
TOTAL
D-1 Mar 31, 2003 Profit & Loss on Sales Date Specification o
Depreciation 01-02 6000 1-4-2001
N.A 6,000 Depreciation 02-03 6000 1-10-2002
Depreciation03-04 3000 1-1-2003
Add: Sale Value 50000 1-10-2003
65,000 31-3-2004
N.A 8,500 Leess: original Cost -60,000 Please prepare Machinery Ac
2002, 2002-2003 and 2003
Profit 5,000 yearafter

100,000
P/L = Dep+ sale value- cost Price He sold Machine No. A – 1 on 1-
1,00,000*10/100*0/12 Depreciation is charged at 10%
0 13,000
The following Plant and Machinery were purchased by Sita & Co.

Date Specification of the Machine Amount Rs.

1-4-2001 A–1 60,000
1-10-2002 B–1 30,000
1-1-2003 B–2 40,000
1-10-2003 C–1 60,000
31-3-2004 D–1 1,00,000
Please prepare Machinery Account in the ledger of Sita & Co. for the years 2001 –
2002, 2002-2003 and 2003-2004 assuming the year ends on 31st March every
yearafter considering the following points:

He sold Machine No. A – 1 on 1-10-2003 for Rs. 50,000.

Depreciation is charged at 10% on the original value per annum.
 Machinery A/C
Date Particulars J/F Amount Date Particulars
2001 2001
By Depreciation
Apr-01 To Bank A/C (M 1) 60,000 Dec-31 A/C(W.Note of 2001)
Oct-01 To Bak A/C (M 2) 40,000

Dec-31 By, Balance c/d

100,000
2002 2002

By Depreciation A/C
Jan-01 To Balance b/d 89,000 Dec-31 (W.Note of 2002)
Jul-01 To Bank A/C (M3) 20,000
Dec-31 By Balance c/d
109,000

2003
Jan-01
ByBank A/c (1/3 of M1
Jkan 01 To Balance b/d 89,200 sold)
Jan-01 ByP/L A/C
Dec-31 By Depreciation
By Balance c/d
89,200

2004
Jan-01 To Balance b/d 60,480
 Yudhisthir company whose accounting year is the cal
costing Rs. 60,000. It further purchased Machinery on
2002 costing Rs. 20,000. On 1 st January 2003, 1/3rd o
2001 became obsolete an

Show how the Machinery account would appear in the

Depreciation is being charged at 20% p.a. on book valu

J/F Amount
Working Note M1 (April 1,2001)

11,000 Year
2001 60,000
(60000* 20/100* 9/12) =
89,000 9000
100,000 2002 51000*20/100*12/12
10200
1/3 M1 sold (20,000)

19,800 (2/3 is with us (40,000)

2003 40,800
89200 13,600*20/100*0/12= 0
109,000 27,200 *20/100*12/12 =
5440

6,000 Profit & Loss on ale

7,600 Depreciation 2001 1/3
15,120 Depreciation for 2002 1/3
60480 depreciatiuon for 2003
89200
Add:Sale Value
Less: Original Cost
Loss
mpany whose accounting year is the calendar year purchased on 1 st April , 2001 Machinery
000. It further purchased Machinery on 1 st October 2001 costing Rs. 40,000 and on 1 st July,
Rs. 20,000. On 1 st January 2003, 1/3rd of the Machinery which was installed on 1 st April ,
2001 became obsolete and was sold for Rs. 6,000.

Machinery account would appear in the books of the company for all above years.
being charged at 20% p.a. on book value .

M2 (Oct 1,2001) M3 (1July2002) Total

40,000
40,000*20/100*3/12
=2000 N.A 11,000
38000*20/100*12/12 20,000 In RBL the amount considered is book Value
7600 20000*20/100*6/12=2000 19800

30400*20/100*12/12 18000*20/100*12/12
6080
12/12 =
6080 3600 15120

3000
3400
0
6,400
12400
-20000
-7600
book Value
Solution of Q4 Bhim Enterprises have imported a machine
freight Rs. 80,000 and incurred installation
was purchased on 1 st January 2001.

On 1 st July 2002, 1/3rd of the imported m

machinery was purchased to replace the sa
Date Particulars J/F Amount Date Particulars J/F Amount
2000 2000 Depreciation is to be calculated @ 20% p.a
Jul-01 To Bank A/C (M 1) 160,000 Dec-31 BY Depn A/C (W.N. of 2001) 30,000 Show the Machinery Account for all the ye
Jul-01 T oBank A/C 80,000 Working Notes
(Custom Duty paid )
Jul-01 To Bank A/C 60,000
(Inst. Charges paid) Dec-31 By Balance C/D 270,000 Years

Year is considered as Calander Year

300,000 300,000
2001 2001 2000
Jan-01 To Balance b/d 270,000 Dec-31 By Depn A/C (W.N. of 2001 74,000
Jan-01 To Bank A/C ( M2) 100,000
Dec-31 By Balance c/d 296,000 2001

370,000 370,000 2002

2002 2002 One Third
Jul-01 By Bank A/C (1/3 M 1 sold) 34,800
Jan-01 To Balance b/d 296,000 Jul-01 By DepnA/C (on M 1 sold) 7,200 two Third
Jul-01 To Bank A/C (M 3) 50,000 Jul-01 By P/L A/C (note on P/L on Sale) 30,000
Dec-31 By Depn A/C (W.N of 2002) 49,800 2003
Dec-31 By Balance c/d 224,200
346,000 346,000
2003 2003
Jan-01 To Balance b/d 224,200
Bhim Enterprises have imported a machine on 1 st July 2000 for Rs 1,60,000. They also paid customs duty and
freight Rs. 80,000 and incurred installation charges Rs. 60,000. Another indigenous machinery costing Rs. 1,00,000
was purchased on 1 st January 2001.

On 1 st July 2002, 1/3rd of the imported machinery was sold for Rs. 34,800 having become obsolete. Another
machinery was purchased to replace the same, for Rs. 50,000.

Depreciation is to be calculated @ 20% p.a. under W.D.V.

Show the Machinery Account for all the years.
Working Notes

TOTAL
Year is considered as Calander Year
M1 - July 00 M2 -Jan 01 M3- Jul 03
NIL
(1,60,000+80,000+60,000*20/100 NIL
3,00,000*20/100*6/12
30,000 30000
100000*20/100*12/12
2,70,000*20/100*12/12 NIL
54,000 20,000 74000
1/3 Machine is sold 50,000
72000*20/100*6/12 80,000*20/100*12/12 5000*20/100*6/12
7200 16,000 5,000 7200
144000*20/100*12/12
28,800 49,800
115,200 64,000 45,000

Profit on Loss on Sale:

Original Cost of 1/3 72,000
Less: Depn 2001 -7200
Book Value 64,800
Less: Sale Value -34,800
Loss on Sale 30,000