PRC-1 · Chapter 1 · Question 50 of 100
'Swift Couriers' sold an old delivery van for Rs. 400,000. The carrying amount of the van in the books at the time of sale was Rs. 350,000. How is the Rs. 50,000 difference typically classified in the statement of comprehensive income?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) As other income (gain on disposal).
Explanation
When a non-current asset is sold for more than its carrying amount, the resulting profit is not regular revenue. It is classified as a gain on disposal and presented within 'Other Income'.
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