Depreciation has been charged for the years 2008 to 2011 at 10% on reducing
balance method on opening balance of each item of plant and machinery in use.
The balance of plant and machinery account on 31st December, 2011 was Rs. 54,000.
There were no sales during these years but purchases were Rs. 16,800 on September, 2008 and Rs. 11,400
in December, 2010.
The management decided that depreciation should be charged at 20% on the same method but calculated
on the closing balance of each year with retrospective effect from 2008.
You are required to pass journal entry for giving effect to the revised at the end of 2011, and prepare plant
and machinery account and revised plant and machinery for all the years.
8. [Sinking fund method] On 1st July, 2007, Glory Ltd. purchased a machine for Rs. 1, 10,000
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