Q.A machine purchased for ₹50,000 on 1 April 2023, depreciated at 10% per annum under the Straight Line Method (charged directly to the Asset Account), was sold on 31 March 2026 (after being held for exactly 3 full years) for ₹32,000. Compute the profit or loss on sale, and show the Machine Account.

Compare the book value at the date of sale (cost less 3 years' depreciation) against the sale proceeds — a shortfall is a loss on sale.

Annual depreciation = 50,000 × 10% = ₹5,000. Over the 3 full years held (2023-24, 2024-25, 2025-26), accumulated depreciation = 3 × 5,000 = ₹15,000. Book value on the date of sale = 50,000 − 15,000 = ₹35,000.

Since the machine was sold for ₹32,000, LESS than its book value of ₹35,000, the shortfall is a LOSS on sale = 35,000 − 32,000 = ₹3,000.

Machine Account

A common error is forgetting to charge the FINAL year's depreciation (up to the date of sale) before comparing book value with sale proceeds — the book value used for computing profit/loss …