A business purchased a motor vehicle on 1 January 2012 for $24000. The estimated useful life of the motor vehicle was four years and the estimated residual value at the end of four years was $8000. The business depreciates motor vehicles at 25% per annum using the reducing balance method. No depreciation is charged in the year of disposal. The motor vehicle was sold on 31 July 2015 for $12000. What was the profit on the sale of the motor vehicle?

Q: What topic does this question test?

This question tests Depreciation and Non-Current Assets in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting May/June 2016 examination, Paper 1 Variant 2 (9706_s16_qp_12.pdf).

Question

A business purchased a motor vehicle on 1 January 2012 for $24000. The estimated useful life of the motor vehicle was four years and the estimated residual value at the end of four years was $8000. The business depreciates motor vehicles at 25% per annum using the reducing balance method. No depreciation is charged in the year of disposal. The motor vehicle was sold on 31 July 2015 for $12000. What was the profit on the sale of the motor vehicle?

Oracle Prep · Accepted Answer

The correct answer is A: $1875.

✓ Correct Answer

📋 Examiner Report & Trap Analysis

🎯 Mark Scheme Breakdown

Unlock the Examiner's Analysis

About This A-Level Accounting Question

Topic

Source

Practice on Oracle Prep

Related Accounting Questions