Question

months) 7. AB Bros. Purchased fixed asset of 7 87,000 which is expected to last for seven years. Depreciation is written off under straight line method. The scrap value of asset is 3,000. How would the asset will be show in balance sheet after the end of 3rd year. Also calculate the amount of profit/loss on sale if: (a) Sold for 45,000 at the end of 4th year. (b) Sold for 7 25,000 at the end of 5th year. Ans. Value of asset 7 51,000, (a) Profit on sale 6,000, (b) Loss on sale 2,000]​

Answer 1

Answer:

I don't know but I think ans 360

Answer 2

Given:

AB Bros. Purchased a fixed asset of 7 87,000 which is expected to last for seven years. Depreciation is written off under the straight-line method. The scrap value of the asset is 3,000.

To Find:

How would the asset be shown in the balance sheet after the end of 3rd year? Also calculate the amount of profit/loss on sale if:

(a) Sold for 45,000 at the end of the 4th year.

(b) Sold for 25,000 at the end of the 5th year.

Solution:

The cost of fixed assets is 87000, scrap value is 3000 and useful life is 7 years. Now calculating the depreciation,(using the straight-line method)

$=\frac{87000-3000}{7}\\=12000$

Now the written down value of cost at the end of 3rd year will be,

$=87000-(12000*3)\\=51000$

(a) written down value of assets at the end of 4th year will be,

$=87000-12000*4\\=39000$

Now the profit will be=45000-39000

                                   =6000

Hence, the profit if sold for 45000 at the end of 4th year will be 6000.

(b) written down value of assets at the end of 5th year will be,

$=87000-12000*5\\=27000$

Now the loss will be=27000-25000

                                 =2000

Hence, the loss if sold for 27000 at the end of 5th year will be 2000.