M/s Digital Studio bought a machine for `Rs.` 8,00,000 on April 01,2013 . Depreciation was provided on straight-line basis at the rate of `20%` on original cost. On April 01, 2015 a substantial modification was made in the machine to make it more efficient at a cost of `Rs.` 80,000. This amount is to be depreciated @ 20% on straight line basis. Routine maintenance expenses during the year 2013-14 were `Rs.` 2,000
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 31, 2016.

Explanation

Working Notes
(1) Cost of modification is capitalised but routine repair expenses are treated as revenue expenditure
2. Calculation of balance of provision for depreciation account on 01.04.2014. Original Cost on 01.04.2013` " " =Rs. 8,00,000`
Depreciation for the years 2013-14 and 2014-15 `" " =Rs. 3,20,000^(1)`
` ("@"% "of" Rs. 8,00,000)`
(3) Depreciation for the year 2015-16 is calculated as under:
`20% "of" 8,00,000 " " =Rs. 1,60,000`
`20% "of" Rs. 80,000" " =underline Rs. 16,000`
Total Depreciation for 2015-16 `" " =Rs.1,76,000^(2)`
(4) Amount to be charged to profit and loss account
Depreciation `" " Rs. 1,76,000^(2)`
Repair and maintencance `" " Rs. 2,000`