Ell Limited acquired plant and machinery for use in its business at a cost of £80,000. The plant and machinery was estimated to have a residual value of £20,000 and an estimated useful life of 4 years. The plant and machinery has been depreciated on the reducing balance basis at a rate of 29.50%. 2 years after the date of acquisition the plant and machinery was sold and a loss of £5,000 was made on the sale of this asset. What is the cash inflow from the sale of the plant and machinery that will be recorded under cash flows from investing activities?
A) £34,762
B) £39,762
C) £44,762
D) £44,821

Question

Quizplus · Accepted Answer

The cash inflow from the sale of the plant and machinery is £34,762. This is calculated as follows:Sale proceeds = £80,000 - (29.50% x 2 x £80,000) = £39,762Less: Loss on sale = £5,000Cash inflow = £34,762

Ell Limited Acquired Plant and Machinery for Use in Its