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A D - Loving Life (Querist)
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06 January 2009 when machinery is at cost is there then while preparing a/c of machinery disposal a/c then depreciation as charged at credit of it?
why?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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29 March 2012 If the Machine A/c is carried at cost, then yearly depreciation must have been booked to Accumulated Depreciation A/c by passing the following entry:

Depreciation A/c Dr
To Accumulated Depreciation

Accumulated depreciation will have a credit balance.

At the time of sale of machinery following entries shall be passed:

1. Machinery Disposal A/c Dr
To Machinery A/c

2. Accumulated Depreciation A/c Dr
To Machinery Disposal A/c
(Being depreciation expense transferred to disposal account)

Therefore, such depreciation will be credited to Machinery Disposal A/c

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