Gavin sold an item of machinery on 31 October 20X4 for £6750.He had bought the machine exactly five years previously for £15 500 and had decided to depreciate it at the rate of 15% each year on the reducing balance basis. What was Gavin's profit or loss on disposal of the machine (to the nearest £)?

Question

Quizplus · Accepted Answer

The machine's book value after 5 years of depreciation at 15% reducing balance is calculated, and the difference between the sale price and this book value gives the loss.

Gavin Sold an Item of Machinery on 31 October 20X4