Sanjay purchased machinery for ₹ 90,000 on 1st October, 2011. He spent ₹ 10,000 as installation expenses. Depreciation is to be provided at 10% on the Fixed Instalment method.
Prepare machinery account for three years ending 31st December every year.

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Accepted Answer

>

> [!TLDR]
> Installation expense is capitalised, so the machinery's cost = 90,000 + 10,000 = Rs 1,00,000. Under the Fixed Instalment (Straight Line) method, annual depreciation = 10% of Rs 1,00,000 = Rs 10,000. The machine was bought on 1 Oct 2011, so only 3 months' depreciation (Rs 2,500) is charged in 2011, then Rs 10,000 in each of 2012 and 2013. The closing balance on 31 Dec 2013 is Rs 77,500.
>
> **Cost of machinery:** 90,000 + 10,000 (installation) = Rs 1,00,000. Annual depreciation (SLM) = 1,00,000 x 10% = Rs 10,000. For 2011, from 1 Oct to 31 Dec = 3 months → 10,000 x 3/12 = Rs 2,500.
>
> **Machinery Account**
>
> | Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) |
> | --- | --- | --- | --- | --- | --- |
> | 2011 Oct 1 | To Bank (90,000 + 10,000) | 1,00,000 | 2011 Dec 31 | By Depreciation | 2,500 |
> | | | | 2011 Dec 31 | By Balance c/d | 97,500 |
> | | | 1,00,000 | | | 1,00,000 |
> | 2012 Jan 1 | To Balance b/d | 97,500 | 2012 Dec 31 | By Depreciation | 10,000 |
> | | | | 2012 Dec 31 | By Balance c/d | 87,500 |
> | | | 97,500 | | | 97,500 | …

Q.Sanjay purchased machinery for ₹ 90,000 on 1st October, 2011. He spent ₹ 10,000 as installation expenses. Depreciation is to be provided at 10% on the Fixed Instalment method.
Prepare machinery account for three years ending 31st December every year.

Concept understanding — Straight Line Method

Date	Particulars	Amount (Rs)	Date	Particulars	Amount (Rs)
2011 Oct 1	To Bank (90,000 + 10,000)	1,00,000	2011 Dec 31	By Depreciation	2,500
			2011 Dec 31	By Balance c/d	97,500
		1,00,000			1,00,000
2012 Jan 1	To Balance b/d	97,500	2012 Dec 31	By Depreciation	10,000
			2012 Dec 31	By Balance c/d	87,500
		97,500			97,500

Q.Sanjay purchased machinery for ₹ 90,000 on 1st October, 2011. He spent ₹ 10,000 as installation expenses. Depreciation is to be provided at 10% on the Fixed Instalment method. Prepare machinery account for three years ending 31st December every year.

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Q.Sanjay purchased machinery for ₹ 90,000 on 1st October, 2011. He spent ₹ 10,000 as installation expenses. Depreciation is to be provided at 10% on the Fixed Instalment method.
Prepare machinery account for three years ending 31st December every year.

Unlock everything free for 14 days