• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Accounting for profit/loss for disposal

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Accounting for profit/loss for disposal

  • This topic has 7 replies, 3 voices, and was last updated 3 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • December 25, 2018 at 2:19 pm #492698
    ranaar99
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    Hello sir,
    I need help with this case the teacher’s solution says one thing and mine says another I’ve been stuck on it for 5 days and my exam is on the 27th

    would you please show me the correct method of handling this case out cuz its driving me mad

    thank you very much sir I appreciate it

    btw his answer was 625 profit
    mine is 3500 loss

    A business has an accounting year end of 31 March. It purchased a truck on 1 April 20X3 at a
    total cost of $21,000, including $1,000 for one year of insurance cover. At the date of purchase,
    the truck had an estimated useful life to the business of eight years, and had an estimated
    residual value of $3,000. The truck was traded in for a replacement vehicle on 31 March 20X8
    at an agreed valuation of $10,000. The truck was depreciated on a straight-line basis, with a
    pro-rated charge in the year of acquisition and disposal.
    Calculate the profit or loss on disposal of the truck.

    December 26, 2018 at 9:21 am #493253
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Depreciation is charged at the rate of (20,000 – 3,000) / 8 = 2,125 per year.

    It was owned for 5 years, and therefore the NBV at the date of sale was:
    20,000 – (5 x 2125) = 9,375.

    It was sold for 10,000, and therefore the profit on sale = 10,000 – 9,375 = 625.

    Have you not watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.

    December 26, 2018 at 10:02 am #493720
    ranaar99
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    can you link these lectures to me? and thank you so much I didn’t exclude the insurance cost cuz I thought 21,000 was the actual net worth.. silly me

    and one more thing it was purchased in the first of april 2×13 (which the openning year) and disposed of on the end of march 2×18 ( year end)
    so doesn’t that mean that the depreciation should be charged on 6 years? why 5?

    December 26, 2018 at 10:10 am #493746
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You can find the lectures (and all out other free material) by clicking on ACCA in the top bar and then choosing Paper FA.

    The first year ends on 31 March 14, the second ends on 31 March 15, and so on. Keep counting and you will find there are 5 whole accounting years.

    December 26, 2018 at 11:35 am #494587
    ranaar99
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    we dont count the first year in? but it says a pro-rated charge on the year of acquisition and disposal..

    December 27, 2018 at 10:25 am #499008
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Yes – we do count the first year.

    It was purchased on 1 April X3 and so the first year ends on 31 March X4.

    December 15, 2021 at 1:21 pm #644316
    fathima92
    Member
    • Topics: 2
    • Replies: 9
    • ☆

    Thank you

    December 15, 2021 at 4:14 pm #644352
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 8 posts - 1 through 8 (of 8 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • John Moffat on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • osman-the-zephyr@ on MA Chapter 1 Questions Accounting for Management
  • adebusola on MA Chapter 1 Questions Accounting for Management
  • Sharith on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • Sharith on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in