Page 368 - Microsoft Word - 00 BA3 IW Prelims STUDENT.docx

Chapter 20

Example 3

R purchased a machine at a cost of $25,000 on 1 April 20X2. The machine
was sold for $6,500 on 31 March 20X6. At that date, accumulated depreciation
on the machine amounted to $17,000.

Required:

What was the profit or loss on disposal of the machine?

Example 3: Solution
$
Sale proceeds 6,500
Less: carrying amount of machine at disposal date:
Cost of machine 25,000
Less: accumulated depreciation (17,000)
––––––

(8,000)
––––––
Loss on disposal (1,500)

362