A-LevelAccountingPreparation of financial statements9706/12 · Oct/Nov 2023 · Q141 Mark
A business prepared its statement of profit or loss for the year ended 31 December. During that year, on 30 April, a non-current asset had been sold. The following information is available in respect of this item. cost $130000 sale proceeds $53 500 residual value $10000 carrying value at 1 January $52 500 expected life 8 years Non-current assets are depreciated using the straight-line method, with depreciation being charged for each month of ownership. No accounting entries had been made in respect of this non-current asset for the year ended 31 December. What was the effect of this omission on the profit for the year?
A$1000 understated
B$5000 overstated
C$6000 understated
D$9000 overstated
✓ Correct answer
A: $1000 understated
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