P Ltd sold an item of property plant and equipment to its subsidiary S Ltd on the following basis: cost to P Ltd $24,000.The equipment is 3 years old and had been depreciated at 10% per annum straight line.Sale Price was $20,000.The gain recorded by P Ltd on sale would be:

Question

Quizplus · Accepted Answer

The equipment's carrying amount after 3 years of depreciation at 10% per annum is $16,800 ($24,000 - ($24,000 * 10% * 3)). The sale price is $20,000, so the gain is $20,000 - $16,800 = $3,200.

P Ltd Sold an Item of Property Plant and Equipment