sed a motor vehicle on 1 January 2014 for £24,000. It had an expected useful life of 5 years and estimated scrap value of £4,000. During the year ended 31 December 2018 the vehicle was sold for £2,700. No depreciation is charged in the year of disposal. What was the profit or loss on
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Tavares Ltd. purchased a motor vehicle on 1 January 2014 for £24,000. It had an expected useful
life of 5 years and estimated scrap value of £4,000. During the year ended 31 December 2018 the
vehicle was sold for £2,700. No
What was the profit or loss on disposal?
a) Loss of £1,300
b) Loss of £5,300
c) Loss of £2,700
d) Profit of £2,700
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