A company purchased a machine on 1 April 2017 for $25000. It was depreciated at 20% per annum using the straight-line method. A full year's depreciation is charged in the year of purchase but none in the year of sale. On 30 June 2019 the machine was sold for $12500. The company year-end is 31 December. What was the profit or loss on the disposal of the machine?

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 2020 examination, Paper 1 Variant 2 (9706_s20_qp_12.pdf).

Question

A company purchased a machine on 1 April 2017 for $25000. It was depreciated at 20% per annum using the straight-line method. A full year's depreciation is charged in the year of purchase but none in the year of sale. On 30 June 2019 the machine was sold for $12500. The company year-end is 31 December. What was the profit or loss on the disposal of the machine?

Oracle Prep · Accepted Answer

The correct answer is C: $2500 loss.

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