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Question
On 1st July 2016 M/s. Ramai & Co. .sold Machinery for ₹ 7,000 the original cost of ₹ 10,000 which was purchased on 18th April 2015. Find out the profit or loss on sale of Machinery by charging depreciation at 10% p.a. on original cost on 31st March every year.
Solution
Original cost of machinery on 01.04.2015 = ₹ 10,000
Less: Dep for 2015-16 for 12 months = ₹ 1,000
W.D.V. on 01.04.2016 = ₹ 9,000
Less: Dep for 2016-17 for 3 months = ₹ 250
W.D.V. on 01.07.2016 = ₹ 8,750
Less: Selling price = ₹ 7,000
∴ Loss on sale of machinery = ₹ 1,750
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