Draupadi & Co.

commenced business on 1st January 2015, when they purchased plant and equipment for
7,00,000. They adopted a policy of charging depreciation at 15% per annum on SLM basis and over the years,
their purchases of plant have been:

Date Amount
1/1/2016 150,000
1/1/2019 200,000
On 1-1-2019 it was decided to change the method and rate of depreciation to RBM on the advice of the new
Auditor. Make Plant & Equipment Account for year 2019 if changes done Prospectively

Also make Plant & Equipment Account for year 2019 if changes done Retrospectively
 PLANT& EQUIPMENT A/C ( Prospective Change)
Date Particulars J/F Amount Date Particulars J/F
2015 2015

Jan-01 To Bank A/C (M1) 700,000 Dec-31 By Depreciation A/C

(See W.N of 2015)
By Balance c/d
700,000
Jan-01 To Balance b/d 595,000 Dec-31 By depreciation A/C
Jan-01 To Bank A/C 150,000 (see W.N of 2016)
Dec-31 By Balance c/d
745,000
2017 2017
Jan-01 To Balance b/d 617,500 Dec-31 By zDepreciation A/C
(see W.N.of 2017)
Dec-31 By Balance c/d
617,500
2018 2018
To Balance b/d 490,000 Dec-31 By depreciation A/C
(See W.N of 2018)
By Balance c/d
To Balance b/d 490,000
2019 2019
Jan-01 To Balance b/d 362,500 Dec-31 By Depreciation A/C
Jan-01 Bank A/C 200,000 (See W.N of 2019)

Dec-03 By Balance c/d

562,500
2020 2020
Jan-01 ToBalance c/d 478,125
PLANT& EQUIPMENT A/C ( Retrospective Change)
2019 2019

Jan-01 To Balance b/ 362,500 31-Dec BY Depreciation A/C

 (As shown in Working Note
Jan-01 To Bank A/C (M3) 200,000 on book value basis)
 Working Note
Amount Straight Line Method
Year M1 (Jan 1, 2015)
Prospective Changes: Here
the change in method is
from the year of change
given.i.e.2019Since the
change is from 2019 and on
a prospective basis there is
no entry in the profit & Loss
Account

105,000 2015 700,000

70000
595,000 2016 105000
700,000 700000*15%
127,500 2017 105000
700000*15%
617,500 2018 700000*15%
745,000 105,000

127500 2019

490000
617,500 Reducing Balance Method

127,500 Book Vale

Original Value 7,00000
362500 2015 105000
490,000 595,000
2016 105000
84,375 490,000
2017 105000

478125
562,500 385,000

2018 105000
280,000
depn for
84,375 2019 42000
 2020 238000

YEAR SLM
2015 105000
2016 105000
2017 105000
2018 105000
2019 420000
 Working Note
Straight Line Method
M2 (Jan 1, 2016) M3 (Jan 01, 2019) TOTAL
Retrosceptive Changes:
Here the change in made in
particular year but the
efect is seen from the very
beginning.So the difference
indepreciation is caculated
and recorded in the Profit
& Loss Accountin the year
the method is changed

N.A N.A
70,000
150,000 N.A
150000*15% 127500
22500 N.A
22500 127500
225000 N.A
127500

200,000

Reducing Balance Method

Book Vale Book Vale

NIL

150000
22500
127500
22500

22500
82500 200,000 562,500

12375 30000 84375

 70125 170000 478125

RBM
105000 Book Value (M1)
89250 89250
75863 505750
64467 429887
54813 365420