Q.A machine purchased for ₹60,000 on 1 April 2022, depreciated at 10% per annum under the Straight Line Method and charged directly to the Machine Account, was sold on 31 March 2025 (after being held for exactly 3 full years) for ₹45,000. Compute the profit or loss on sale and show the Machine Account.

Compare the book value on the date of sale (cost less 3 years' depreciation) against the sale proceeds — a surplus over book value is a profit on sale.

Annual depreciation = 60,000 × 10% = ₹6,000. Over the 3 full years held (2022-23, 2023-24, 2024-25), accumulated depreciation = 3 × 6,000 = ₹18,000. Book value on the date of sale = 60,000 − 18,000 = ₹42,000.

Since the machine was sold for ₹45,000, MORE than its book value of ₹42,000, the excess is a PROFIT on sale = 45,000 − 42,000 = ₹3,000.

Machine Account

A common slip is forgetting to charge the FINAL year's depreciation, up to the actual date of sale, before comparing book value with sale proceeds — the book value used in …