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The following information was disclosed in the financial statements of Highfield Co for the year ended 31/12/20X2
………………………………………20X1……………………… 20X2
………………………………………..$…………………………..$
Plant & Equipment cost …..255,000………………… 235,000
Accumulated depreciation (100,000) ……………….(110,000)
During 20X2, the following occurred in respect of Plant & Equipment:
$
Purchases of plant and equipment 10,000
Depreciation charged on plant and equipment 25,000
Loss on disposal of plant and equipment 8,000
What were the sales proceeds received on disposal of the plant and equipment?
A $7,000
B $15,000
C $25,000
D $8,000
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this one made me totally confused. Do such type of question even come in the exam? I mean the one’s that are loaded with figures like this one?It is a bit difficult to follow the years.
However, if the cost at the start of the year was 255000 and they bought assets for 10000 the the cost at the end of the year would have been 265000. Because it was actually 235000 at the end of the year it must mean that the cost of the assets sold was 30000.
The accumulated depreciation at the start of the year was 100000 and the depreciation for the year was 25000. That would have given a total of 125000. Because the total at the end of the year was only 110000 it must have meant that the depreciation on the assets sold was 15000.
So the net book value of the assets sold was 30000 – 15000 = 15000.
Since they were sold at a loss of 8000, the sale proceeds must have been 7000
And yes – there could be questions like this in the exam.
Upon reading and grasping your well ordered and structured explanation, the question made perfect sense to me and I am able to comprehend it now 🙂
Thank you! 🙂A company is preparing its statement of cash flows for the year ended 31 December 20X2. Relevant extracts from the accounts are as follows.
Statement of profit or loss
$
Depreciation 15,000Profit on sale of non-current assets 40,000
Statement of financial position…….. 20X2 ………………..20X1
………………………………………………………$ ……………………..$
Plant and machinery – cost …………..185,000 ……………..250,000
Plant and machinery – depreciation… 45,000 ……………50,000
Plant and machinery additions during the year were $35,000. What is the cash flow arising from the sale of non-current assets?
A $40,000
B $100,000
C $120,000
D $135,000
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help with this one too please.
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