CIMA BA3 · Chapter 10 · Question 4 of 10
An asset was bought on 1 January 20X1 for $25,000 and depreciated straight-line over five years with no residual value. It was sold on 31 December 20X3 for $8,500. What is the profit or loss on disposal?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Loss of $1,500
Explanation
Annual depreciation = $25,000 / 5 = $5,000. Accumulated depreciation after three years = $15,000. Carrying amount = $25,000 - $15,000 = $10,000. Proceeds $8,500 - carrying amount $10,000 = loss of $1,500.
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