Accounting 9706 · AS & A Level · Accounting for non-current assets

Accounting for non-current assets — practice question

A non-current asset was acquired on 1 January 2019 for a price of $\text{\$}290000$. In addition, delivery and installation expenses of $\text{\$}10000$ were paid. The asset is depreciated using the reducing balance method at $20\%$ per annum. A full year’s depreciation is recorded in the year of purchase, and no depreciation is recorded in the year of disposal. The non-current asset was then sold on 31 December 2021 for $\text{\$}205000$. Further disposal expenses of $\text{\$}5000$ were paid. What was the profit on disposal?

  • A$\text{\$}8000$
  • B$\text{\$}13000$
  • C$\text{\$}14400$
  • D$\text{\$}46400$

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