PRC-1 · Chapter 6 · Question 95 of 100
An entity disposes of an old computer. It originally cost Rs. 40,000, and Accumulated Depreciation is Rs. 35,000. It is scrapped for zero cash. What is the impact on the Profit or Loss statement?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 5,000 Loss
Explanation
The carrying amount at disposal is Cost (40k) - Acc Dep (35k) = 5k. Since it was scrapped for zero proceeds, the entire carrying amount of Rs. 5,000 must be written off as a loss on disposal.
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