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PLANT AND MACHINERY ACCUMULATED DEPRECIATION 

 

 $      

 

 $      

Plant disposals (20% of $30,000  

   for 2 years) 

 12,000 

Balance b/d 

 70,000 

Balance c/d 

 58,000 

 

             

 

 70,000 

 

 70,000 

 

 

Balance b/d 

 58,000 

PLANT AND MACHINERY DISPOSALS 

 

 $      

 

 $      

Plant and machinery 

 30,000 

Accumulated depreciation 

 12,000 

P/L a/c (profit on disposal) 

   1,000 

Plant and machinery part exchange 

 19,000 

 

 31,000 

 

 31,000 

QUESTION 

Non-current asset ledger accounts

 

A business purchased two rivet-making machines on 1 January 20X5 at a cost of $15,000 each. Each 

had an estimated life of five years and a nil residual value. The straight line method of depreciation is 

used. 

Owing to an unforeseen slump in market demand for rivets, the business decided to reduce its output of 

rivets, and switch to making other products instead. On 31 March 20X7, one rivet-making machine was 

sold (on credit) to a buyer for $8,000. 

Later in the year, however, it was decided to abandon production of rivets altogether, and the second 

machine was sold on 1 December 20X7 for $2,500 cash. 

Prepare the machinery account, depreciation of machinery account and disposal of machinery account 

for the accounting year to 31 December 20X7. 

ANSWER 

MACHINERY ACCOUNT 

20X7 

 

 $      

20X7 

 

 $      

1 Jan 

Balance b/d 

 30,000 

31 Mar  Disposal of machinery 

 

 

 

 

 

   account 

 15,000 

 

 

 

1 Dec 

Disposal of machinery 

 

 

 

             

 

   account 

 15,000 

 

 

 30,000 

 

 

 30,000 

MACHINERY – ACCUMULATED DEPRECIATION 

20X7 

 

$      

20X7 

 

$      

31 Mar  Disposal of 

 

 

 

 

 

   machinery account* 

 6,750 

1 Jan 

Balance b/d 

 12,000 

1 Dec 

Disposal of 

 

 

 

 

 

   machinery account** 

   8,750 

31 Dec  P/L account*** 

   3,500 

 

 

 15,500 

 

 

 15,500 

*  Depreciation at date of disposal = $6,000 + $750 

**  Depreciation at date of disposal = $6,000 + $2,750 

***  Depreciation charge for the year = $750 + $2,750 

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