Malfoy Ltd sold a motor vehicle on 30 September 2014. The proceeds from sale were $21,000 cash. The Balance Sheet as at 30 June 2014 reported the motor vehicle at a cost of $45,000 and the accumulated depreciation was $21,600. The motor vehicle is depreciated using the straight-line method at a rate of $5,400 per annum. 'A profit or loss on sale of a non-current asset is simply an over or understatement of depreciation'. Using the information given above, prepare calculations to support your explanation of the statement.

Malfoy Ltd sold a motor vehicle on 30 September 2014. The proceeds from sale were $21,000 cash. The Balance Sheet as at 30 June 2014 reported the motor vehicle at a cost of $45,000 and the accumulated depreciation was $21,600. The motor vehicle is depreciated using the straight-line method at a rate of $5,400 per annum. 'A profit or loss on sale of a non-current asset is simply an over or understatement of depreciation'. Using the information given above, prepare calculations to support your explanation of the statement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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