Multiple choice

A machine costing Rs. 10,00,000 was purchased on 1 April, 2008. It is to be depreciated at15% P.A. under straight line method. The machine was sold on 31 July, 2010 for Rs. 7,00,000. Find out the profit or loss on sale of machine.

  1. Rs. 50,000 profit

  2. Rs. 50,000 loss

  3. Rs. 1,50,000 profit

  4. Rs. 1,50,000 loss
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A Correct answer
Explanation

Cost of machine                        =          Rs. 10, 00, 000 Less: depreciation for 2 years, 4 months= Rs. 3, 50, 000                                     W.D.V. =             Rs. 6, 50, 000                                     S.P.                 =  Rs. 7, 00, 000 Thus, profit = Rs. 50, 000

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