- June 17, 2021 at 8:12 pm #625609shaunak22Participant
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- Replies: 41
A car was purchased by a newsagent business in May 20×0 for:
Road tax 150
The business adopts a date of 31 December as its year end.
The car was traded in for a replacement vehicle in August 20X3 at an agreed value of
It has been depreciated at 25% per annum on the reducing balance method, charging
a full year’s depreciation in the year of purchase and none in the year of sale.
What was the profit or loss on disposal of the vehicle during the year ended
how is a the ans shoudn’t B be the answer since full year dep in year of purchase and no depreciation in year of sale so three years depreciation is 1 year – 2500,2year – 1875,3 year- 1406.25 total depreciation = 5781.25
carraying amount = 10000 – 5781.25 =4218.75
selling price is 5000 so 5000 – 4218.75 = 781.25(781 approx)June 18, 2021 at 7:19 am #625629John MoffatKeymaster
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I do not know which book you are using, but assuming that you have copied the question correctly then the answer is indeed B.
(I assume that you are using a Revision Kit from one of the ACCA Approved Publishers – BPP and Kaplan. If it is the BPP Kit then tell me the number of the question so I can check the wording).
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