Amit depreciates his buildings at the rate of $2 \%$ per annum using the straight line method. He bought land for $\$ 200000$. It cost $\$ 120000$ to build a warehouse on it. After five years he sold the warehouse for $\$ 299000$. What was the profit or loss on disposal?

Explanation

To calculate the profit or loss on disposal, we need to calculate the carrying value of the warehouse after 5 years of depreciation. The carrying value is $\\$ 120000$ - ($\\$ 120000$ x 0.02 x 5) = $\\$ 114000$. The profit on disposal is $\\$ 299000$ - $\\$ 114000$ = $\\$ 185000$. However, this is not an option, so we need to choose the closest answer. The correct answer is $\\$ 185000$ profit, but the closest option is $\\$ 11000$ profit, which is incorrect. However, the correct answer is not available, so we will choose the closest option, which is $\\$ 9000$ profit is incorrect, but the correct answer is not available.

Amit depreciates his buildings at the rate of $2 \%$ per annum using the straight line method. He bought land for $\$ 200000$. It cost $\$ 120000$ to build a warehouse on it. After five years he sold the warehouse for $\$ 299000$. What was the profit or loss on disposal?

Explanation

⬆ Related Topic

📘 Syllabus

📝 Practice Questions

🤖 Practice with AI

📚 Related Concepts