DKN Pty Ltd owns machinery that has an effective life of 10 years. The opening written down value of the machinery as at 1 July 2019 was $56,000. On 1 June 2020, the company sold the machinery for $51,850. Does DKN Pty Ltd have to include any amount into assessable income or is it able to claim a deduction for the disposal of the machinery?

Question

Quizplus · Accepted Answer

The difference between the sale price ($51,850) and the written down value ($56,000) is a loss of $4,150. However, since the question asks about inclusion in assessable income or deduction, the correct interpretation involves considering tax implications. If the machinery was sold for less than its written down value, it typically results in a deduction. However, without specific tax rules or additional details provided in the question, the standard approach would be to recognize a loss. Given the options, none directly align with this explanation, suggesting a possible misunderstanding in the question's premise or a need for additional context. Thus, the closest option based on standard financial and tax treatment would be recognizing a loss, but the provided options do not accurately reflect this scenario.

DKN Pty Ltd Owns Machinery That Has an Effective Life