The following information is available at 30 June 20*7:

■ Premises account £278,000.
■ Provision for depreciation of premises account £88,960
■ During February 20*8 part of the premises that had cost £56,000 was sold for £68,000. The aggregate depreciation relating to the premises that had been sold amounted to £6,720.
■ Depreciation is charged at 1% per annum on cost.

Required

a) Prepare a disposal of premises account to record the sale of premises.
b) Prepare a balance sheet extract showing the entry for premises at 30 June 20*8.

Sometimes when an asset is replaced the ‘old’ asset is traded in and an allowance is made by the supplier of the ‘new’ asset.

I recently purchased a new car for £14,000. The garage took my ‘old’ car in part exchange. They made an allowance on my ‘old’ car of £6,500. I paid £7,500 cash for the new car. The garage actually bought my old car from me for £6,500. This, together with my payment of £7,500 made up the total purchase price.