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Depreciation accounting
Q Major ltd., charges depreciation on its plant and machinery @ 10% per annum on the diminishing balance method. On 31 st March, 2009 the company decides to adopt straight line method of charging depreciation With retrospective effect from 1 st April, 2005, the rate of depreciation being 15%. On 1 st April, 2008 the plant and machinery account stood in the books at Rs. 2,91,600. On 1 st July, 2008, a sum of Rs. 65,000 was realized by selling a machine cost of which on 1st April, 2005 was Rs. 90,000. On 1 st January, 2009 a new machine was acquired at a cost of Rs. 1 ,50,000.
Show the plant and machinery account in the books of the company for the year 31st March, 2009.
Replies (4)
koi to solve karo
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Depreciation as per WDV upto 31.03.2008 = (291600/0.9*0.9*0.9 - 291600) = 108400
Depreciation as per SLM upto 31.03.2008 = (291600/0.9*0.9*0.9) * .15*36/12 = 180000
Therefore Extra Depreciation to be charged to profit and loss due to change in method of accounting i.e. due to change in accounting policy = Rs. 79310
Depreciation for 08-09: (400000 - 90000) * .15 + 90000*.15*3/12 + 150000*.15*3/12= 55500
Book Value of Machinery Sold on 30.06.08 as per SLM = 90000 - 90000*.15*39/12 = 46125
Sale proceeds = 60000
profit on sale : 13875
Closing Balance of Plant and Machinery A/c as on 31.03.09 = (400000-90000) - 310000*.15*4 + 150000 - 5625 = 268375
I agree with Saurav.
Hey can u tell how u calculated 79310 and how u calculated 268375 plz specify .
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