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Dear tutor:
The carrying amount of a company’s non-current assets was $200,000 at 1 August 20X0.During the year ended 31 July 20X1,the company sold non-current assets for $25,000 on which it made a loss of $5,000.The depreciation charge of the year was $20,000.What was the carrying amount of non-current assets at 31 July 20X1?I think the loss is 180,000-25,000=155,000,I can’t understand why disposal IT as $25,000.Can you help me?Thank you very much!
You have assumed that the sold all of their assets, but that is certainly not the case (which is why the question asks for the net book value of the assets at the end of the year (i.e. the remaining assets).
Given that you are told that the loss on the assets sold was $5,000 and that they were sold for $25,000, they must have had a carrying value of $30,000.
Therefore the carrying value of the assets still remaining at the end of the year is 200,000 – 30,000 – 20,000 = $150,000.
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