the question has accumulated depreciation of 8000 of the machinery sold for rs. 46000 costing 60,000. then can we say that the cost of machinery 60,000 includes accumulated depreciation of 8000 ? If not explain with reason.
Dear Student
Cost of machinery means the amount spent to acquire it or say purchase price of machinery.
When this machinery is sold we have to deduct the accumulated Depreciation from the cost of the machine to arrive at the book value of the machine. And then this book value is compared with the sale value to arrive at profit or loss on the sale.
See,
So this simply means that From the cost of a machine accumulated depreciation is required to be deducted to arrive at book value.
Regards
Cost of machinery means the amount spent to acquire it or say purchase price of machinery.
When this machinery is sold we have to deduct the accumulated Depreciation from the cost of the machine to arrive at the book value of the machine. And then this book value is compared with the sale value to arrive at profit or loss on the sale.
See,
Particulars | Amt |
Cost Price of Machine | 60,000 |
Less: Accumulated Depreciation | 8,000 |
Book Value of Machine at the time of Sale | 52,000 |
Less : Sale Price | 46,000 |
Loss on Sale as Sale price is less than book value | 6,000 |
So this simply means that From the cost of a machine accumulated depreciation is required to be deducted to arrive at book value.
Regards