Greg Limited sells a piece of property, plant and equipment. This non-current asset had originally cost £64,000. £42,000 accumulated depreciation had been charged on this asset by the date of disposal. The sale of this non-current asset generated a profit on disposal of £3,000. How much cash was received from the disposal of this piece of property plant and equipment?

Question

Quizplus · Accepted Answer

The carrying amount of the asset at the time of disposal is calculated by subtracting the accumulated depreciation (£42,000) from the original cost (£64,000), which equals £22,000. Since the sale generated a profit of £3,000, the cash received is the carrying amount plus the profit, which is £22,000 + £3,000 = £25,000.

Greg Limited Sells a Piece of Property, Plant and Equipment