On Apr 1, 2006 X Ltd purchased a second-hand machine for Rs 1,60,000 and spent Rs 40,000 on its cartage and installation. The residual value at the end of its expected useful life of 4 years is estimated at Rs 80,000. On Sep 30, 2008. This machine is sold for Rs 1,00,000. Depreciation is to be provided according to Straight Line Method.
You are required to pass Journal entries in the books of X Ltd and prepare Machinery Account and Depreciation Account for the first three years assuming that the accounts are closed on Mar 31, each year.