A machine is purchased for Rs 1,00,000. Installation charges of Rs. 10,000 were incurred. Depreciation @ 10% was provided on straight fine Bases. The machine was sold for Rs. 60,000 after 5 years. Calculate the profit or loss on sale of machine.

Rs. 5,000 loss

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Rs. 5,000 Profit

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Rs. 60,000 Profit

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Rs. 40,000 Loss

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Solution

The correct option is B Rs. 5,000 Profit
Profit/loss on sale = Sale price - WDV of the machine
= RS-60,000 - RS-55,000
= RS-5,000.

Working note:-
WDV of the machine = cost - depreciation on machine for 5 years
= 1,10,000 - (1,10,000 x 10/100 x 5 years)
= 1,10,000 - 55,000
= RS-55,000

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A machine is purchased for Rs 1,00,000. Installation charges of Rs. 10,000 were incurred. Depreciation @ 10% was provided on straight fine Bases. The machine was sold for Rs. 60,000 after 5 years. Calculate the profit or loss on sale of machine.

The correct option is B Rs. 5,000 ProfitProfit/loss on sale = Sale price - WDV of the machine = RS-60,000 - RS-55,000 = RS-5,000.Working note:-WDV of the machine = cost - depreciation on machine for 5 years = 1,10,000 - (1,10,000 x 10/100 x 5 years) = 1,10,000 - 55,000 = RS-55,000

The correct option is B Rs. 5,000 Profit
Profit/loss on sale = Sale price - WDV of the machine
= RS-60,000 - RS-55,000
= RS-5,000.

Working note:-
WDV of the machine = cost - depreciation on machine for 5 years
= 1,10,000 - (1,10,000 x 10/100 x 5 years)
= 1,10,000 - 55,000
= RS-55,000