An asset cost Rs. 300,000 and has accumulated depreciation of Rs. 180,000 when it is sold for Rs. 140,000. What gain or loss arises on disposal?
Correct answer: A. Rs. 20,000 gain
- A. Rs. 20,000 gain
- B. Rs. 20,000 loss
- C. Rs. 40,000 gain
- D. Rs. 40,000 loss
Explanation
The asset's carrying amount is Rs. 120,000, calculated as Rs. 300,000 minus Rs. 180,000. Selling it for Rs. 140,000 produces a gain of Rs. 20,000.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
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