QUESTION 9 An entity entered into the following two transactions relating to items of PPE during...

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QUESTION 9 An entity entered into the following two transactions relating to items of PPE during the year ended 31 December 20X5: - Asset A, with a carrying amount of R210 000 on 1 January 20X5 and an original cost of R400 000, was sold for R220 000 on 30 June 20X5. The payment will only be received on 30 June 20X6. - Asset B, with a carrying amount of R480 000 on 1 January 20X5 and an original cost of R800 000, was withdrawn from use on 30 September 20X5 after environmental inspector certified that the asset can no longer be used. The asset cannot be altered to secure future use which makes the sale thereof unlikely. The scrap value of the asset is negligible. Both these assets are depreciated at 20% per annum on a straight-line basis, and the current interest rate on asset financing is 10% per annum. REQUIRED: Calculate the profit / loss on disposal of these assets. QUESTION 9 An entity entered into the following two transactions relating to items of PPE during the year ended 31 December 20X5: - Asset A, with a carrying amount of R210 000 on 1 January 20X5 and an original cost of R400 000, was sold for R220 000 on 30 June 20X5. The payment will only be received on 30 June 20X6. - Asset B, with a carrying amount of R480 000 on 1 January 20X5 and an original cost of R800 000, was withdrawn from use on 30 September 20X5 after environmental inspector certified that the asset can no longer be used. The asset cannot be altered to secure future use which makes the sale thereof unlikely. The scrap value of the asset is negligible. Both these assets are depreciated at 20% per annum on a straight-line basis, and the current interest rate on asset financing is 10% per annum. REQUIRED: Calculate the profit / loss on disposal of these assets.

Answer rating: 100% (QA)

To calculate the profitloss on the disposal of assets A and B we need to determine the carrying amou... View the full answer