A company sells an old delivery van for Rs8,000 at the end of the year. The company uses the straight-line depreciation method. The delivery van cost Rs30,000. The accumulated depreciation is Rs20,000. Which of the following is correct

Loss of Rs 2000

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Profit of Rs 2000

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Loss of Rs 8000

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Profit of Rs 8000

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Solution

The correct option is A
Loss of Rs 2000

The accumulated depreciation is Rs20,000, which means the van’s book value is Rs10,000 when it’s sold. The loss on the sale is Rs2,000 (Rs10,000 – 8,000).

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