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a firm bought a machine for $5000 on 1 jan 2001 which had an expected useful life of 4 years and residual value of $ 1000. asset depreciated by straightline basis . firms policy is to charge depreciation in the year of disposal . on 31 dec 2003 the machine was sold for $1600 . what amount should be entered in 2003 income statement on disposal…..
i got the dep as 1000 but since it is 2 years its 2000…..my question is do u have to subtract this 2000 from the cost of the asset ? because if i do then its 5000- 2000=3000 3000- 1600 is 1400 but the answer is loss of 400
please explainThe depreciation is indeed 1,000 a year.
However you should subtract 3 years (not 2) for 2001, 2002, and 2003.
That brings the value down to 2,000. Since it was sold for 1600 there is a loss of 400 🙂
hi sir, the asset register shows a carrying value for non current assets of $85600ledger accounts include a cost balance of $185000and an accumulated depreciation balance of $55000 which of the following may explain the discrepancies
this is the answer please explain i don’t understand
the omission of the disposal of an asset from ledger accounts cost 25600 and accumulated depreciation at disposal $11200 and the omission of land costing $30000 from the registerplease help
The carrying value in the asset register (85600) should be the same as the net book value in the ledger (185,000 – 55,000 = 130,000).
There is land missing from the register, so the total there should be 85,600 + 30,000 = 115,600.
As asset needs removing from the ledger account because it has been sold. The net book value is 25,600 – 11,200 = 14,400. So the net figure in the ledger should be 130,000 – 14,400 = 115,600
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