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Hi Sir,
my doubt is this:
plant with a carrying amount of 75000 (original cost 90000) sold for 30000 . what is the profit or loss on sale of the plant ?
2.what is the difference between carrying amount and original cost ?
3. when making a plant a/c which amount should come on the disposal ???
THANK YOU !!!The carrying amount is the net book value, which in this question is 75,000.
If it is sold for 30,000, then there is a loss on disposal of $45,000.
I am not sure why you want to write up a plant account (you cannot be asked for t-accounts in the exam).
However, the plant account shows the asset at cost and therefore when you sell an asset you credit it with the cost of the asset.(Since you headed up your question ‘cash flow’ I am guessing you are currently studying Statement of cash flows. Have you watched the free lecture on this?)
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