Question

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. Profit of Rs. 10,000
• B. Loss of Rs. 50,000
• C. Loss of Rs. 40,000
• D. No profit, No loss

Answer 1

The correct option is D No profit, No loss

This can be calculated as:

Cost of machinery Rs.100000

Overhauling cost Rs.10000

Total cost Rs.110000

Less: Accumulated depreciation Rs.50000

WDV of the machine at 6th year Rs.60000

Sale price of the machine Rs.60000

Profit/Loss Rs.NIL