A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on written down value method, find the profit or loss on sale of the Second hand car?
Correct answer: B. Loss of 22,000
- A. Loss of 20,000
- B. Loss of 22,000
- C. Loss of 11,000
- D. Profit of 11,000Open Savings Account
Explanation
The book value after two years is 200,000 × 90% × 90% = 162,000. Selling it for 140,000 therefore produces a loss of 22,000.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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