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PROFIT OR LOSS ON DISPOSAL

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › PROFIT OR LOSS ON DISPOSAL

  • This topic has 1 reply, 2 voices, and was last updated 6 hours ago by John Moffat.
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  • Author
    Posts
  • December 13, 2025 at 3:40 pm #723947
    petestudentacca
    Participant
    • Topics: 11
    • Replies: 3
    • ☆

    Hello proffesor,

    I have one issue with this Question. I got an answer C) $104 loss. i calculated:

    5000-500= 4500
    Y1: 4500 *0,2= 900 CA , DEP 3600
    Y2: 3600 *0,2 = 720 , 2880 DEP
    Y3: 2880 *0,2= 576, DEP 2304

    2304-2200= 104 loss

    Is mine correct or? bc i answers they did not calculate with residual value, so i am confused, how should i calculate this and on the exam

    question: A non-current asset was disposed of for $2,200 during the last accounting year. It had been purchased exactly three years earlier for $5,000, with a residual value of $500, and had been depreciated on the reducing balance basis, at 20% per annum.

    What was the profit or loss on disposal?

    A. $360 loss
    B. $150 loss
    C. $104 loss
    D. $200 profit

    December 13, 2025 at 9:34 pm #723948
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54804
    • ☆☆☆☆☆

    When using the reducing balance method, the residual value is not relevant.

    So the depreciation in the first year is 1,000 (I do not know why you write ‘CA’) and the written down value is 4,000 (I do not know why have you written ‘DEP”).

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