DEPRECIATION QUESTION WITH ANSWER QUESTION NO. 1

1.      OMTEX CLASSES

1.  A company purchased Machinery worth Rs. 2, 00,000 on 1^st January, 1974. Accounting year of the Company closes on 31^st December every year. Company provides depreciation at 10% p.a. on the original cost. On 31^st December, 1976 the machinery was sold for Rs. 1, 20,000. Give the machinery Account for three years. [F.I.M]

Working Note: calculation of depreciation

Date	Machinery	Total depreciation
1.1.74 Depreciation@10%	200000 20000	20000
1.1.75 Depreciation@10%	180000 20000	20000
1.1.76 Depreciation@10%	160000 20000	20000
31.12.76/1.1.77 Sold	140000 120000
	20000(loss)

M/S ______________________

MACHINERY ACCOUNT

DATE	PARTICULARS	AMOUNT	DATE	PARTICULARS	AMOUNT
1.1.74	To Cash Bank Account	200000	31.12.74	By depreciation Account	20000
			31.12.74	By balance c/d	180000
		200000			200000
1.1.75	To balance b/d	180000	31.12.75	By depreciation account	20000
			31.12.75	By balance c/d	160000
		180000			180000
1.1.76	To balance b/d	160000	31.12.76	By depreciation account	20000
			31.12.76	By cash / bank account	120000
			31.12.76	By profit / loss account	20000
		160000			160000