Question

On June 30, 2011, a business sold an asset for Rs1,500 that costed Rs 5,000. The asset had a 5-year useful life, no salvage value, and had been used by the business since January 1, 2008. Straight-line depreciation was used. The fiscal year ends on December 31. What was the result of selling the plant asset?

• A. No gain or loss on the disposal of asset
• B. Rs 1,000 gain on the disposal of asset
• C. Rs 500 loss on the disposal of asset
• D. Rs 500 unrecognized gain on the sale of a asset.

Answer 1

The correct option is A

No gain or loss on the disposal of asset

Particulars	Amount
Cost of Asset	5000
Less: Depreciation till June 2011	3500	(1000*3.5)
Book value	1500

Gain = 1500-1500 = 0