Day: March 29, 2024

On 1 April 2015 Alex plc bought a Stafford car for £23,500.

The company’s depreciation policy for cars is 30% per annum using the reducing balance method.

On 1 April 2017, the Stafford car was part exchanged for a Derby car, which had a purchase price of £28,200.

Alex plc handed over a cheque to the seller for £19,350, in final settlement.

What was Alex plc’s profit or loss on the disposal of the Stafford?

Select ONE answer:

1. £5,150 loss
2. £7,835 profit
3. £2,665 loss
4. £6,250 loss

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 3

1. Not correct
2. Not correct
3. Correct –> Cost £23,500 – Accumulated Depreciation £11,985 – PEV £8,850 = £2,625 Loss
4. Not correct

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