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1. For purchase of asset
Asset’s account ……… Dr.
To Cash/Bank account

2. For providing depreciation at end of year

Depreciation account ……… Dr.
To provision for depreciation account

3. For sale of assets

Cash/Bank account ……… Dr.
To asset sale account

4. Cost of assets sold transferred from assets account to sale of assets

Assets sales account ……… Dr.
To assets account

5. Total depreciation on asset sold transferred from provision for

depreciation account.
Provision for depreciation account ……… Dr.
To asset sale a/c

6. Profit or loss on sale of assets will be transferred from asset sale account
to profit or loss account.

1. ‘A’ LTD purchase machinery for Rs. 50,000/- on 1.1.95. The company closes
its accounts on 31st December, every year. Depreciate machinery by 20 % on
W.D.V basis.
A part of the machinery costing Rs. 10,000/- was sold on 30th June, 97 for Rs.
5,000/- Show relevant accounts for 1995, 1996 and 1997.

2. On 1-04-2002 ‘B’ LTD purchase machinery costing Rs. 70,000/- which

was installed at a cost of Rs. 5,000/- On 1.1.2003 they purchased a second
machinery for Rs. 20,000/- On 1.1.2005 the second machinery was sold for
Rs. 12,000/- and on the same date new machinery was purchased for Rs.
30,000/- B LTD closes his accounts on 31st march every year and provides
depreciation @ 10% on W.D.V basis. Prepare relevant account under
provision for depreciation for 3 years.

3. R Ltd are maintains fixed assets at cost. Depreciation provision

account are maintained separately on each assets. On 31/12/98 its position
was follows.
Plant & machinery cost ————— Rs. 1, 50,750
Depreciation Provision ————— Rs. 62, 350
A machine costing Rs. 6,000/- purchased on 1st January, 1997 was sold for
Rs. 5,500/- on 30th June, 99 Depreciation is provided @ 10% on W.D.V.
method show relevant accounts for 1999.

4. On 1st April 1993 firm purchase a machinery for Rs. 2,00,000/-. On 1st
October, 1993 additional machinery of Rs. 1,00,000 was purchased. On 1st
October, 1994 machinery purchased on 1st April 1993 became obsolete and
sold for Rs. 90,000. On 1st October 1995 new machinery was purchased for
Rs. 2,50,000 and the machinery was purchased on 1st October 1993 was skid
fir Rs, 8,50,000 on the same date.
Provide Depreciation 10% on S.L.M show machinery Account,
Depreciation Account, Provision for Depreciation account and machinery sold
account. For the three years 1993,1994,1995,1996.