Q.Sri Ganesh Traders purchased a machine on 1 October 2023 for ₹1,00,000, with an estimated life of 5 years and no scrap value, charging depreciation under the Straight Line Method (proportionate for part of a year), directly to the Machine Account. The accounting year closes on 31 March. Prepare the Machine Account for the three years ended 31 March 2024, 2025 and 2026.

Under the straight line method depreciation is fixed at 10% of cost = ₹8,000 every year. After three years (2020, 2021, 2022) the book value falls from ₹80,000 to ₹56,000. The furniture is sold for ₹40,000, so the loss on sale = 56,000 − 40,000 = ₹16,000.

This is a standard AP Inter 2nd-year (Commerce) depreciation-and-disposal question, following the NCERT/CBSE-aligned commerce method.

Depreciation each year = 10% of ₹80,000 = ₹8,000 (fixed under SLM).

Furniture Account

Capitalised cost = 72,000 + 8,000 = Rs. 80,000; SLM depreciation = Rs. 8,000 p.a. Book value on 30 June 2013 = Rs. 60,000; sold for Rs. 50,000, so loss on sale = Rs. 10,000.

Working

• Cost of machine = 72,000 (purchase) + 8,000 (repairs + installation) = Rs. 80,000
• Annual depreciation (SLM) = 10% of Rs. 80,000 = Rs. 8,000
• 2011 (full year): Rs. 8,000; book value 31-12-2011 = Rs. 72,000
• 2012 (full year): Rs. 8,000; book value 31-12-2012 = Rs. 64,000
• 2013 (1 Jan to 30 June = 6 months): 8,000 x 6/12 = Rs. 4,000; book value at sale = Rs. 60,000
• Sold for Rs. 50,000, hence loss = 60,000 - 50,000 = Rs. 10,000

Machinery Account