Question
A machine costing ₹4,00,000 has a useful life of 5
years with scrap value ₹25,000. The company provides depreciation on WDV at 25% p.a. After 3 years, the machine is sold for ₹1,80,000. What is the profit or loss on sale?Solution
WDV after 3 years = 4,00,000 × (0.75³) = 4,00,000 × 0.422 = ₹1,68,750. Sale proceeds = ₹1,80,000. Profit = 1,80,000 – 1,68,750 = ₹11,250
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