Brown Ltd purchased a machine on the first day of the financial period, 1 July 2018, for $100 000. The machine was depreciated using the reducing balance method and a rate of 20 per cent. It was sold on 1 July 2019. If the machine was sold for $60 000, what was the gain or loss on disposal?
A) Loss of $20 000
B) Loss of $40 000
C) Gain of $60 000
D) Gain of $20 000

Question

Quizplus · Accepted Answer

The machine's book value at the time of sale was $80,000 (after 20% depreciation on $100,000). It was sold for $60,000, resulting in a loss of $20,000.

Brown Ltd Purchased a Machine on the First Day of the Financial