PASS ENTRY Machine Cost 100,000/- life of machine 10 years..charged depreciation 10% after 7 years machine been sold for 50% of the cost prices ?

ASSETS PURCHASE ENTRY:

ASSETS (MACHINERY) A/C - Dr -100.000

PAYABLES A/C - Cr -100,000

DEPRECIATION ENTRY (EVERY MONTH) TILL7 YEARS:

DEPRECIATION AMOUNT PER MONTH -100,000 /120 MONTHS

DEPRECIATION A/C - DR  -833.33

ACCUMULATED DEPRECIATION A/C - CR -833.00

SALE OF ASSETS:

BOOK VALUE: ORIGINAL COST - ACCUMULATED DEPRECIATION

                           100,000 -70,000

                             30,000 = BOOK VALUE

GAIN/LOSS ON SALE OF ASSETS: BOOK VALUE - SALE VALUE OF ASSETS

                             30,000 -50,000

                              (20,000) = GAIN ON SALE OF ASSETS

SALE OF ASSETS ENTRY:

ACCUMULATED DEPRECIATION A/C - DR -70,000

CASH OR BANK A/C - DR -50,000

ASSETS (MACHINERY) A/C - CR -100,000

GAIN ON SALE OF ASSET A/C - CR -  20,000

At the time of purchase of Machine (It will purchase at the1st date of the financial year)

    a) Assets (Machine)   100,000 Dr

        Bank / Cash                     100,000 Cr

the Company follow depreciation method to depreciated the asset than at the end of every year following entry will be recorded

     b) Depreciation expense    10,000 Dr

         Allowance for depreciation  10,000 Cr

let suppose the machine will sold at the1st date of the8th financial year from the date of purchase

the WDV of the assets at that time is = Cost - Allowance for deprecation =100,000 -70,000 =30,000. The machine will be sold for50% of the cost prices i.e.50,000 than following entry will be recorded

     c) Allowance for deprecation          70,000 Dr

         Bank / AR                                   50,000 Dr

         Assets (Machine)                                100,000 Cr

         Gain on Sale of Assets (Machine)        20,000 Cr.

1.       At cost

Dr Machine Disposal Account $100,000

Cr Machine Account $100,000

2.      

        At disposal period

Dr Accumulated Depreciation account $70,000 (100,000/10 =10,000 x7yrs)

Cr Machine Disposal Account $70,000

3.      

        Cash received for the sale

Dr Cash or Bank $50,000 (0.5x100,000 =50,000)

Cr Machine Disposal Account $50,000

4.   

            Profit on Disposal

Dr Machine Disposal Account $20,000

Cr Profit and Loss Account $20,000