On 1st April, 2020, 1/3rd of the machinery purchased on 1st July, 2017 for ₹1,20,000 was sold for ₹19,000. The amount of profit/loss will be ₹……………………… . The rate of depreciation is 10%p.a. on written down
Answers
Answer:
Correct option is D)
Since the profit is generated on sale of a capital asset. There are two ways to represent this case:
Cost of Machinery Rs.30000
Accumulated Depreciation Rs.12000
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Written down value Rs.18000
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Case 1:
Value of Machinery sold Rs. 35000
Less: WDV Rs. 18000
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Capital Profit Rs.17000
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Case 2:
Value of Machinery Sold Rs.35000
Cost of Machine Rs.30000
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Capital Profit Rs.5000
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Cost of Machine Rs.30000
WDV of Machine Rs.18000
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Profit on sale of Machine Rs.12000
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