QED Ltd has a financial year ending 30 June. On 3 January 2018, the company bought a machine for £84,000. It cost an additional £12,000 to assemble the machine and test it to get it ready for use. The company assumed that the machine had no residual value and decided to depreciate it using the reducing balance method at 50% per annum. The company also decided to charge depreciation in full during the year of acquisition but none in the year of disposal. The machine became obsolete in 2020 due to difficulties with sourcing spare parts. On 15 November 2020, the company sold the machine for £8,000. What would be the effect of the machine disposal on the Income Statement for the year ended 30 June 2021?

Answer rating: 100% (QA)

The effect of the machine disposal on the Income Statement f... View the full answer