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On 1-1-2016, a machinery was purchased for ₹105000. On 1-7-2017, another machinery was purchased for ₹75000, and on 1-1-2018, a third machinery was purchased for ₹60000. Depreciation is to be provided at 10% using the straight-line method. Show the machinery account up to 31-12-2019.

Answer :

To prepare the Machinery Account using the Straight-Line Depreciation method, we'll first calculate the depreciation for each machinery piece and then reflect these transactions in the Machinery Account.

Machinery Details:

  1. Machinery 1:

    • Purchased on: 1-1-2016
    • Cost: ₹105,000
    • Depreciation Rate: 10% per annum

  2. Machinery 2:

    • Purchased on: 1-7-2017
    • Cost: ₹75,000
    • Depreciation Rate: 10% per annum

  3. Machinery 3:

    • Purchased on: 1-1-2018
    • Cost: ₹60,000
    • Depreciation Rate: 10% per annum

Calculations:

1. Machinery 1 Depreciation:

  • For 2016: [tex]\frac{10}{100} \times 105,000 = \text{₹10,500}[/tex]
  • For 2017 and 2018: ₹10,500 annually
  • For 2019: ₹10,500 annually

2. Machinery 2 Depreciation:

  • For 2017: 6 months from 1-7-2017 (half-yearly): [tex]\frac{10}{100} \times 75,000 \times \frac{6}{12} = \text{₹3,750}[/tex]
  • For 2018 and 2019: ₹7,500 annually

3. Machinery 3 Depreciation:

  • For 2018 and 2019: entire year: [tex]\frac{10}{100} \times 60,000 = \text{₹6,000}[/tex]

Machinery Account from 2016 to 2019:

2016

:

Dr

Cr

DateParticulars1-1-2016To Bank A/C------

2017

:

Dr

Cr

1-7-2017To Bank A/C------

2018

:

Dr

Cr

1-1-2018To Bank A/C------

2019

:

Dr

Cr

------

This account reflects the original cost, plus new purchases, less the depreciation up to the closing balance of the year 2019.

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