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Sweeto maintains a fleet of company cars and depreciates all vehicles on a straight-line basis over a period of three years from the month of acquisition. During 2012 the company disposed of the following vehicles:
I. A Volvo which had originally cost $32,000 on 1 April 2009 was sold on 31 July 2012 for $7,000
I. An Audi which had originally cost $40,000 on 1 September 2010 was sold on 30 November 2012 for
$18,000
What figure for profit or loss on disposal of non-current assets should appear in the company’s statement of
profit or loss for the year ended 31 December 2012?Sir how do we get the dep amount ?
The question says that they are depreciated straight line over three years from the month of acquisition. So you need to count the number of months that they have been owned for and calculate on that basis.
Hi, pls assist me, i m unable to reach to the solution by following steps:
divided the cost by 3 yrs life to get the an years depreciation and then charged it according to the months been used
yet unsolved! pls guide
The Volvo had been owned for more than 3 years and therefore its carrying value on the date of sale was zero. So there is a profit on sale of $7,000.
The Audi had been owned for 27 months, and therefore its carrying value on the date of sale was 40,000 – (27/36 x 40,000) = $10,000. So there is a profit on sale of $8,000.
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