Sparkler Co disposed of some items of plant and equipment for sale proceeds of $2000000
The carrying amount of the items disposed was $1500000
While calculating for the value in the ledger, do we have to value at lower of cost or NRV ie 1500000 on the credit side of the asset account or keep it at 2000000?
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5y ago#1The rule about lower of cost or NRV applies to inventory, not to plant and equipment.
If assets are disposed of then they are removed from the ledgers and there is a profit in the SOPL of 500,000.
I show all the entries needed in my free lectures on non-current assets.
The NCA had a carrying amount of 368400 and 485000 at the beginning and end of the year. Depre for the year is 48600. Assets originally costing 35000 with a carrying amount of 18100 were sold for 15000.
What is the addition to NCA for the year?
this is a question for the similar doubt
485000+48600+18100-368400
now why have they considered 18100 when the asset is sold for 15000? how do you know which amount is to be considered?
5y ago#3When an asset is sold, then the carrying amount of all the assets reduces by the carrying amount of the asset sold (so that the balance left is the carrying amount of the assets remaining).
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