# Pro-rata Depreciation and Disposal of PPE — AS 10
## Pro-rata (Time-Proportionate) Depreciation
Depreciation is charged only for the period the asset is owned during the year.
$$\text{Depreciation} = \text{Cost} \times \text{Annual Rate} \times \frac{\text{Months Held}}{12}$$
How to determine months held:
- Assets held all year → 12 months
- Assets sold during year → months from year-start to sale date
- Assets purchased during year → months from purchase date to year-end
---
## Profit/Loss on Disposal
$$\text{Loss/(Gain) on Disposal} = \text{Carrying Amount at Sale Date} - \text{Sale Proceeds}$$
Where Carrying Amount at Sale Date = Original Cost − Total Accumulated Depreciation (including depreciation for the partial period up to sale date).
---
## Question 10 — Multiple Machines (FY 2022-23, Rate = 10% SLM)
Period: 01/04/2022 to 31/03/2023
| # | Machine | Cost (₹) | Status | Period Held | Depreciation (₹) |
|---|---|---|---|---|---|
| 1 | Opening stock | 9,60,000 | Sold 30/06/22 | 3 months | 9,60,000 × 10% × 3/12 = 24,000 |
| 2 | Opening stock | 46,70,000 | Held all year | 12 months | 46,70,000 × 10% × 12/12 = 4,67,000 |
| 3 | Purchased 01/06/22 | 21,12,000 | Held rest of year | 10 months | 21,12,000 × 10% × 10/12 = 1,76,000 |
| 4 | Purchased 01/07/22 | 15,65,000 | Held rest of year | 9 months | 15,65,000 × 10% × 9/12 = 1,17,375 |
| Total | 7,84,375 |
---
## Book Value of Machinery as at 31/03/2023
| # | Cost (₹) | Depr for Year (₹) | CA on 31/03/23 (₹) | Note |
|---|---|---|---|---|
| 1 | 9,60,000 | 24,000 | 9,36,000 | Sold — derecognised |
| 2 | 46,70,000 | 4,67,000 | 42,03,000 | |
| 3 | 21,12,000 | 1,76,000 | 19,36,000 | |
| 4 | 15,65,000 | 1,17,375 | 14,47,625 | |
| 75,86,625 | Net CA on 31/03/23 |
---
## Loss on Sale — Machine 1 (Sold 30/06/22)
| ₹ | |
|---|---|
| Cost on 01/04/22 | 9,60,000 |
| Less: Depreciation (3 months, Apr–Jun) | 24,000 |
| Carrying Amount on 30/06/22 | 9,36,000 |
| Sale Proceeds | 8,25,000 |
| Loss on Sale → P&L | 1,11,000 |