Assume that a machine with a cost of $90 000 has accumulated depreciation of $48 000 on the date of its disposal. What is the profit or loss on disposal of the old machine if it was traded-in for $40 000 on a new machine? (Ignore GST.)

Question

Quizplus · Accepted Answer

The book value of the machine at the time of disposal is calculated as the original cost ($90,000) minus the accumulated depreciation ($48,000), which equals $42,000. Since the machine was traded in for $40,000, the loss on disposal is the difference between the book value ($42,000) and the trade-in value ($40,000), which is $2,000.

Assume That a Machine with a Cost of $90 000