Q.On 1st April 2021, a firm purchased machinery for ₹60,000. On 1st October 2022, it purchased additional machinery for ₹20,000. Depreciation is charged at 10% per annum on original cost under the Straight Line Method (assume no scrap value). Prepare the Machinery Account for three years ending 31st March 2022, 2023 and 2024.

The second machine was bought mid-year, so it earns only six months' depreciation in the year it was added, and a full year's depreciation every year after that. …

Step 1 — Depreciation on each machine.

• Machine 1 (₹60,000, from 1 April 2021): full-year depreciation = 10% of 60,000 = ₹6,000 every year.
• Machine 2 (₹20,000, from 1 October 2022): full-year depreciation would be 10% of 20,000 = ₹2,000; but in 2022-23 it was owned for only 6 months (1 Oct 2022 to 31 Mar 2023), so that year's charge is half: ₹1,000. From 2023-24 onward it gets a full year's ₹2,000.

Step 2 — Depreciation total, year by year.

• 2021-22: Machine 1 only = ₹6,000.
• 2022-23: Machine 1 (₹6,000) + Machine 2, half-year (₹1,000) = ₹7,000.
• 2023-24: Machine 1 (₹6,000) + Machine 2, full year (₹2,000) = ₹8,000.

Step 3 — Machinery Account.

2021-22:

2022-23:

2023-24: …

Cross-check by adding total depreciation charged (6,000 + 7,000 + 8,000 = 21,000) to the final closing balance (59,000): 21,000 + 59,000 = 80,000, exactly the total cost of both machin …

Charging a full year's depreciation on the second machine in 2022-23, ignoring that it was purchased only halfway through the year; forgetting to add the second machine's cost …