Alex Trading plc bought a machine for £5,000 on 1 January 2021, when it had an expected useful life of four years and an expected residual value of £1,000.
Straight-line depreciation is to be applied on a monthly basis.
On 31 December 2023, the machine was sold for £1,600.
The amount to be entered in the 2023 income statement for profit or loss on disposal is?
Select ONE answer:
- profit of £600
- loss of £600
- profit of £350
- loss of £400
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 4
- Not correct
- Not correct
- Not correct
- Correct – (£5,000 – £1,000)/4 = £1,000 depreciation per annum for 3 years. Dr Cost £5000 vs CR Depreciation £3,000 + Proceeds £1,6000 + Loss £400
This work is licensed under a Creative Commons Attribution 4.0 International License.
The Multiple Choice Questions Blog 
You must be logged in to post a comment.