Multiple choice

A machinery is purchased on April 1, 2009 for Rs. 2,00,000. It is depreciated @ 10% p.a. on straight line method. It is sold on December 31, 2011 at 80% of book value. The books are closed on 31 March every year. What is the resultant profit or loss at the time of sale of machinery?

  1. Rs. 15,000 profit

  2. Rs. 29,000 loss

  3. Rs. 29,000 profit

  4. Rs. 33,000 loss
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cost of machine is Rs. 2,00,000. The depreciation is to be charged for 2 years, 9 months. The depreciation per year is Rs. 20,000. Thus, it is total Rs. 55,000 for the said period. The WDV is now Rs. 1,45,000. The selling price is Rs. 145000 * 80%, i.e. Rs. 116000. Thus, loss is Rs. 29,000.

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