ACCA Knowledge Level Disposal of Non-Current Assets — practice questions

Explore 2 free Disposal of Non-Current Assets questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Disposal of Non-Current Assets questions and exercises with answers

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A truck cost $35,000 with Accumulated Depreciation of $28,000 is sold for $5,000 cash. What gain or loss results on the sale?Read the answer and worked solution →Disposal Steps (ACCA FA)Read the answer and worked solution →

Worked practice questions

A truck cost $35,000 with Accumulated Depreciation of $28,000 is sold for $5,000 cash. What gain or loss results on the sale?

Gain of $3,000
Loss of $2,000
Loss of $5,000
No gain or loss

Show answer and solution

Correct answer: B. Loss of $2,000

1. Carrying amount $= \$35{,}000 - \$28{,}000 = \$7{,}000$. 2. Cash received = $5,000. 3. Proceeds are less than carrying amount, so there is a loss. 4. Loss $= \$7{,}000 - \$5{,}000 = \$2{,}000$. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.7.1 "Selling a Fixed Asset (loss)", p.165_

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Disposal Steps (ACCA FA)

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Steps

Remove cost from asset account
Remove accumulated depreciation
Record sale proceeds received
Calculate profit or loss on disposal

Instructions

Tap the asset disposal steps in order.

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