A second-hand machinery was purchased for Rs. 1,00,000 five years ago and was overhauled by carrying out some current repairs at a cost of Rs. 10,000. It has also an accumulated depreciation of Rs. 50,000. It has been disposed of in the beginning of the sixth year for Rs. 60,000. Profit.Loss on such disposal shall be ___________.
A second-hand machinery was purchased for Rs. 1,00,000 five years ago and was overhauled by carrying out some current repairs at a cost of Rs. 10,000. It has also an accumulated depreciation of Rs. 50,000. It has been disposed of in the beginning of the sixth year for Rs. 60,000. Profit.Loss on such disposal shall be ___________.
The correct option is D No profit, no loss
The cost of equipment, vehicles, and furniture
includes the purchase price, sales taxes, transportation fees, insurance paid
to cover the item during shipment, assembly, installation, and all other costs
associated with making the item ready for use.
Therefore, in the given question cost of second hand machine includes current repairs and hence, the cost of machine was Rs. (100000 + 10000) = Rs. 110000.
(Profit) / Loss on sale of machinery = Cost of asset - Accumulated depreciation - Sales value of asset
(Profit) / Loss on sale of machinery = Rs. 110000 - Rs. 50000 - Rs. 60000
(Profit) / Loss on sale of machinery = 0
Therefore, in the above question there is no profit or loss on disposal of asset or machinery.
The cost of equipment, vehicles, and furniture includes the purchase price, sales taxes, transportation fees, insurance paid to cover the item during shipment, assembly, installation, and all other costs associated with making the item ready for use.
Therefore, in the given question cost of second hand machine includes current repairs and hence, the cost of machine was Rs. (100000 + 10000) = Rs. 110000.
(Profit) / Loss on sale of machinery = Cost of asset - Accumulated depreciation - Sales value of asset
(Profit) / Loss on sale of machinery = Rs. 110000 - Rs. 50000 - Rs. 60000
(Profit) / Loss on sale of machinery = 0
Therefore, in the above question there is no profit or loss on disposal of asset or machinery.
