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Craig bought a new car for $19,125. He paid for the new car by taking out a loan of $12,000 and trading in his old car. The old car originally cost $12,750 and had been depreciated by $6,222 at the time of the trade
in.
What is the profit on disposal of the old car?
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit – it is full of exam standard questions together with answers and explanations 🙂
The old car is effectively being sold for 19125 – 12000 = 7125.
The carrying value of the old car at the time of the trade is 12750 – 6222 = 6528
So the profit on disposal is 7125 – 6528 = 597.
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