Question No 18:
A company bought a machine on 1 October year 1 for $52,000. The machine had an expected life of eight years and an estimated residual value of $4,000. On 31 March year 6, the machine was sold for $35,000. The company’s yearend is 31 December. The company uses the straight-line method for depreciation and it charges a full year’s depreciation in the year of purchase and none in the year of sale.
What is the profit or loss on disposal of the machine?
A. Loss $13,000
B. Profit $7,000
C. Profit $10,000
D. Profit $13,000
Answer: D
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