On 31 December 2014 an aeroplane with a cost of $200 000 has accumulated depreciation written off of $90 000. If it was sold for $130 000 on 1 January 2015 how much will be recorded as the expense carrying-value on the disposal of the plane?

Question

Quizplus · Accepted Answer

The carrying value of an asset is calculated by subtracting the accumulated depreciation from the original cost. 
So, carrying value of the plane on 31 December 2014 = $200,000 - $90,000 = $110,000 
Since the plane was sold for $130,000, there will be a gain on disposal, calculated as the selling price minus the carrying value: 
Gain on disposal = $130,000 - $110,000 = $20,000 
Therefore, the expense carrying-value on disposal of the plane will be $110,000 (the carrying value) and the gain on disposal is recorded separately.

On 31 December 2014 an Aeroplane with a Cost of $200