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Depreciation

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(Querist)
17 May 2013 Respected Sir, Im Supratim Ghosh from kolkata. I have a problem regarding following question. I want to know the right journal entry and the process of diminishing balance method

Q) A company bought machinery for Rs. 10000 and depreciation rate is 10%.. Financial year is 1st Jan. to 31st Dec. Above same machinery has been sold at Rs. 5000 on 31st march 2011. This machinery was purchased on 1 Jan. 2010. Depreciation rate is 10% and it is charged with diminishing balance method.
Sir pl give me the ans as soon as possible
Regards Supratim Ghosh
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
17 May 2013 First year depreciation 1st Jan 2010 to 31st Dec 2010 is 10% Rs.10000 x 10% =1000 and 2nd year 3 months depreciation Rs.9000x10%x3/12 = Rs.225/-

so total accumulated depreciation is Rs.1225

Asset current book value is Rs. 8775/- and sold for Rs.5000 so loss is Rs.3775

Entry

Dr:Bank/cash Rs.5000
Dr:loss on sale of asset Rs. 3775
Dr: Accumulated depreciation Rs. 1225
Cr: fixed asset a/c Rs.10000
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