Calculate the amount of cash from sale of machinery from the following items :
A machine costing ₹20,000 having book value of ₹15,000 is sold for ₹12,000 and depreciation charged during the year was ₹8,000. The opening and closing balance in machinery account was ₹1,80,000 and ₹1,72,000 respectively.
Answer & explanation
Correct answer: option 1
The correct answer is option (1)- ₹12,000.
Cost of machinery = ₹20,000
Book value of machinery = 15,000
Depreciation = 20,000 - 15,000
= ₹5,000
₹12,000 is sale value.
Loss = 15,000 - 12,000
= ₹3,000
Sale value is the cash received from sale so answer is 12,000.