A business buys a machine costing £40,000 on 1 January 2017. It expected to keep the machine for 6 years and anticipated it would then sell it for £10,000. The machine was depreciated using the straight-line method. At 31 December 2020 the business sold the machine for £15,000. (i) Did the disposal generate a profit or loss on disposal? [Enter the word “profit” or “loss”] (ii) What is the amount of the profit or loss on disposal?
A business buys a machine costing £40,000 on 1 January 2017. It expected to keep the machine for 6 years and anticipated it would then sell it for £10,000. The machine was depreciated using the straight-line method. At 31 December 2020 the business sold the machine for £15,000. (i) Did the disposal generate a profit or loss on disposal? [Enter the word “profit” or “loss”] (ii) What is the amount of the profit or loss on disposal?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A business buys a machine costing £40,000 on 1 January 2017. It expected to keep the
machine for 6 years and anticipated it would then sell it for £10,000. The machine was
machine for £15,000.
(i) Did the disposal generate a profit or loss on disposal? [Enter the word “profit” or “loss”]
(ii) What is the amount of the profit or loss on disposal?
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