PRC-1 · Chapter 6 · Question 22 of 100
A machine's cost is Rs. 500,000. Accumulated depreciation is Rs. 350,000. The machine is sold, and the business incurs a loss on disposal of Rs. 40,000. What were the exact cash proceeds from the sale?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 110,000
Explanation
Carrying amount = 500k - 350k = 150k. Loss = Carrying amount - Proceeds. 40k = 150k - Proceeds. Therefore, Proceeds = 150k - 40k = Rs. 110,000.
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