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Dear tutor,there is a suspense account?Dr is $5,000,000
The balance of the account is the proceeds of sale of some plant on 1 January 20X4 with a carrying amount at the date of sale of $700,000 and which had originally cost $1,400,000.No other accounting entries have yet been made for the disposalapart from the cash book entry for the receipt of the proceeds. Depreciation on plant has been charged at 25% (straight line basis) in preparing the draft statement of financial position without allowing for the sale.The depreciation for the year relating to the plant sold should be adjusted for in full.What is the profit or loss on disposal of the plant?
The answer is 100,000 loss,I want to know how to calculate it?I can’t understand it.You have not typed all of the information in the question.
It says that the balance of the account is the proceeds of sale. So part of the 5,000,000 balance must refer to something else given in the question, and only the remainder refers to the sale of the plant.
If it is a question in the BPP Revision Kit then say which one and I can explain more.
It is 19.1,Thank you very much.The question is a SOFP so I can’t copy it completely.Sorry~
Under task 2 the question says that the suspense account is made up of two items.
The first is the proceeds of issue of 4M shares at $1.10 per share. So 4,400,000 of the balance is because of the share issue and therefore only the balance remaining of 600,000 is the proceeds of sale (as detailed in (b).Given that the carrying amount of the assets sold was $700,000 and the proceeds of sale were $600,000 then there is a loss on sale of the difference of $100,000.
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