of being used after the existing asset is disposed off, depreciation, should

of being used after the existing asset is disposed off, depreciation, should be provided independently on the basis of its own useful life. Illustration M/s Digital Studio bought a machine for Rs. , , on April , . Depreciation was provided on straight-line basis at the rate of % on original cost. On April , a substantial modification was made in the machine to make it more efficient at a cost of Rs. , . This amount is to be depreciated @ % on straight line basis. Routine maintenance expenses during the year - were Rs. , . Draw up the Machine account, Provision for depreciation account and charge to profit and loss account in respect of the accounting year ended on March , . Solution Books of Digital Studio Machine Account Apr , Mar , , , , , , , Provision for Depreciation Account J.F J.F Mar , , April , , Mar , , , , , , Working Notes . Cost of modification is capitalised but routine repair expenses are treated as revenue expenditure. . Calculation of balance of provision for depreciation account on . . . Original Cost on . . = Rs. , , Depreciation for the years - and - = Rs , , (@ % of Rs. , , ) . Depreciation for the year - is calculated as under: % of , , = Rs. , , % of Rs. , = Rs. , Total Depreciation for - = Rs. , , . Amount to be charged to profit and loss account Rs. , , Repair and maintenance Rs. , Illustration M/s Nishit printing press bought a printing machine for Rs. , , on April , . Depreciation was provided on straight line basis at the rate of % on original cost. On April , a modification was made in the machine to increase its technical reliability for Rs , . On the same date, an important component of the machine was replaced for Rs. , due to excessive wear and tear. Routine maintenance expenses during the year are Rs. , Prepare machinery account, provision for depreciation account. Show the working notes accordingly for the year ending March , . Machinery Account Particular Account Particular Account , , , , , , , , , Provision for Depreciation Account Mar. , , Apr. , , Mar. , , , , , , Working Notes . Cost of Machine for the year , , Depreciation Charged for the Years - and -