- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
This is a question from the mock exams practice questions:-
A company has a year end of 31 jan each year.
They purchased a car for $12000 on 1 of jan 08 and sold it for $5000 in march 2012.
the depreciation policy is to charge 20% reducing balance, with a full years charge in year of purchase but none in year of sale.
What is the profit or loss on sale.my calculated answer is$ 84.80 profit as in 2012 i didnt depreciate asset but it is saying that the answer is 1067.84 profit as they did still depreciate the asset in the year of disposal. Please do advise if i am correct or wrong as i am puzzled. Thanks
The year end is 31 January each year.
The bought the car on 1 Jan 08, which is in the year ended 31 Jan 08.
They sold the car in March 2012, which is in the year ended 31 Jan 2013.So you need to depreciate for the years ended:
31 Jan 08; 31 Jan 09; 31 Jan 10; 31 Jan 11; and 31 Jan 12.
- The topic ‘depreciation and sale of asset’ is closed to new replies.