Q.A machine was purchased on 1 June 2025 for ₹36,000 and sold on 31 January 2026 for ₹33,000, in the same accounting year (April 2025 to March 2026). Depreciation is charged under the Straight Line Method at 12% per annum, proportionate to the period of use. Compute the depreciation for the period held, and the profit or loss on sale.

Depreciation is charged only for the actual 8 months the machine was held (1 June 2025 to 31 January 2026), even though it was both bought and sold within the same accounting year.

Even though the machine was both purchased AND sold within the same accounting year, depreciation must still be charged for the exact period it was actually held — 1 June 2025 to 31 January 2026, which is 8 months.

Annual depreciation = 36,000 × 12% = ₹4,320.

Depreciation for 8 months = 4,320 × 8/12 = ₹2,880.

Book value on the date of sale = 36,000 − 2,880 = ₹33,120. …

Students sometimes assume that because an asset was bought and sold in the SAME accounting year, no depreciation needs to be charged at all before computing profit/loss on sale — depreciation must always be charged …