17 May 2013
Respected Sir, Im Supratim Ghosh from kolkata. I have a problem regarding following question. I want to know the right journal entry and the process of diminishing balance method
Q) A company bought machinery for Rs. 10000 and depreciation rate is 10%.. Financial year is 1st Jan. to 31st Dec. Above same machinery has been sold at Rs. 5000 on 31st march 2011. This machinery was purchased on 1 Jan. 2010. Depreciation rate is 10% and it is charged with diminishing balance method. Sir pl give me the ans as soon as possible Regards Supratim Ghosh
17 May 2013
First year depreciation 1st Jan 2010 to 31st Dec 2010 is 10% Rs.10000 x 10% =1000 and 2nd year 3 months depreciation Rs.9000x10%x3/12 = Rs.225/-
so total accumulated depreciation is Rs.1225
Asset current book value is Rs. 8775/- and sold for Rs.5000 so loss is Rs.3775
Entry
Dr:Bank/cash Rs.5000 Dr:loss on sale of asset Rs. 3775 Dr: Accumulated depreciation Rs. 1225 Cr: fixed asset a/c Rs.10000
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