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a company has year end 31 jan each year. the purchase of car for $12000 on 1 jan 2008 and sold it for $5000 31 march 2012.
depreciation policy is to charge 12% reducing balance method with full year charge of purchase none in the of year sale.
its opentution.com mock exam Q. am not getting correct ans.The question asks you to calculate the profit on sale.
Because the year end is 31 January and it was purchased on 1 January 2008, you need to calculate depreciation for years ended 31 January 2008, 2009, 2010, 2011, and 2012.
The profit or loss on sale is then the difference between the carrying value (net book value) and the sale proceeds.
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