A company purchased an office on 1 January 2013 at a cost of $80,000. It is depreciated over 50 years by the straight line method (nil residual value), with a proportionate charge for depreciation in the year of acquisition and the year of disposal. At 31 December 2014 the office was re-valued to $96,000. There was no change in the expected useful life of the office.
The office was sold on 30 June 2015 for $144,000.
What profit or loss on disposal of the asset will be reported in the statement of profit or loss of the company for the year ended 31 December 2015?
SUGGESTED SOLUTIONS
| $ | |
| COST OF OFFICE AFTER REVALUATION (48 years left) | 96,000 |
| LESS ANNUAL DEPRECIATION (from 1 JAN TO 30 JUNE) | (1,000) |
| CARRYING VALUE OF OFFICE | 95,000 |
| SELLING PRICE OF OFFICE | 144,000 |
| PROFIT/(LOSS) $ | 49,000 |