Read the following information and answer the question.
| PARTICULARS | AMOUNT AT THE BEGINNING OF THE YEAR (₹) |
AMOUNT AT THE END OF THE YEAR (₹) |
| Plant (cost) | 3,00,000 | 3,20,000 |
| Accumulated depreciation | 90,000 | 1,00,000 |
| Patents | 2,60,000 | 1,40,000 |
| Goodwill | 80,000 | 1,00,000 |
ADDITIONAL INFORMATION:
- The depreciation charged during the year on the plant was ₹36,000.
- A plant having a book value of ₹20,000 was sold for ₹16,000 during the year.
- Patents having a book value of ₹80,000 were sold for ₹1,10,000 during the year.
How much amount is paid to purchase the plant?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹66,000.
ACCUMULATED DEPRECIATION ACCOUNT
| PARTICULARS | AMOUNT (₹) | PARTICULARS | AMOUNT (₹) |
| To Plant A/c (Balancing figure for the depreciation on sold machinery) |
26,000 | By balance b/d | 90,000 |
| To balance c/d | 1,00,000 | By depreciation | 36,000 |
| 1,26,000 | 1,26,000 |
PLANT ACCOUNT
| PARTICULARS | AMOUNT (₹) | PARTICULARS | AMOUNT (₹) |
| To Balance b/d | 3,00,000 | By Bank A/c (sale) |
16,000 |
| To Bank A/c (Balancing figure as purchases) |
66,000 | By accumulated depreciation | 26,000 |
| By loss on sale | 4,000 | ||
| By balance c/d | 3,20,000 | ||
| 3,66,000 | 3,66,000 |
THUS, PLANT IS PURCHASED DURING THE YEAR FOR 66,000