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A non-current asset was disposed of for $2,200 during the last accounting year. It had been
purchased exactly three years earlier for $5,000, with an expected residual value of $500,
and had been depreciated using the reducing balance basis, at 20% per annum.
What was the profit or loss on disposal?
A $360 loss
B $150 loss
C $104 loss
D $200 profitSir, I cannot understand the calculations for this. please help out, tks
Since the were using reducing balance, the carrying value (net reliable value) after 3 years would be 2,560 (the expected residual value is of no relevance).
Therefore there is a loss on sale of 2560 – 2200 = 360.
At 31st December 20X1, Tina owned equipment which had cost $168,500. At that date $66,500 had been allowed in respect of depreciation. Tina’s accounting policy is to allow depreciation in equipment at a rate of 25% on the reducing balance basis. The depreciation charge to be include in Tina’s Statement of Comprehensive Income for the year ended 31 December 20X2 should be $……
Help me to find answerWhy are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations.
Even so, if you were to watch my free lectures on this you would not need to ask your question because this is the simplest depreciation question that could be asked 🙂
Watch the lectures and then tell me what you think the answer is. Then I will tell you whether or not your answer is correct (and if not, then why it is not correct).
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