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A firm bought a car for $ 10000 on 1 jan 2009, which had an expected useful life of 4 years and an expected residual value of $2000. The firms policy is to charge depreciation in the year of disposal. On 31 dec 2011 the car was sold for $3200. What amount would appear in the statement of profit or loss for the year ended 31 dec 2011 for the loss on disposal?
Can I see a calculation please?The depreciation each year is (10,000 – 2,000)/4 = 2,000.
There will have been 3 years depreciation (2009, 2010, 2011) and so the carrying value will be 10,000 – 6,000 = 4,000.
Therefore the loss on sale is 4,000 – 3,200 = 800.
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