Question

On 1^st October 2014, a truck was purchased for Rs. 8,00,000 by Laxmi Transports Ltd. Depreciation was provided @ 15% p.a. under diminishing balance method. On 31^st March 2017, the above truck was sold for Rs. 5,00,000. Accounts are closed on 31^st March every year. Find out the profit or loss made on the sale of the truck.

Answer 1

Calculation of Profit or loss on sale of truck:

Note: If Book value is more than the selling price it is called loss.

Book value – selling price = Loss 

5,34,650 – 5,00,000 = 34,650 

∴ Loss on sale of truck = Rs. 34,650