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A company had a balance of Rs.4,0,5000 on 1st January, 2018 in its machinery account ,10% per annum depreciation was charged by diminishing balance method.On the 1st July ,2018 the company sold a part of the machinery for Rs.87,500 ( which was purchased on 1st January ,2016 for Rs.1,20,000) and on the same date , the company purchased a new machinery for Rs.2,50,000 .On 31st December ,2018 the directors of the company decided to adopt the fixed instalment method of depreciation as per AS-10( Revised) instead of diminishing balance method; the rate of depreciation remaining the same.
Question 1: Prepare Machinery Account in the books of the company for the year ended ,2018.
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