Vehicle X cost 80,000, useful life 5 years, residual value 5,000, depreciated straight-line. After 3 years, part-exchange value was 20,000. What was the loss on disposal?

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SSC Financial and Cost Accounting P-1 QUESTION #6105

Question 1

Vehicle X cost $80,000, useful life 5 years, residual value $5,000, depreciated straight-line. After 3 years, part-exchange value was $20,000. What was the loss on disposal?

$12,000
$15,000✔️
$24,000
$30,000

Correct Answer Explanation

Option B ($15,000) is correct.

Annual depreciation = ($80,000 − $5,000) ÷ 5 = $15,000

Accumulated depreciation after 3 years = $45,000

Carrying value = $80,000 − $45,000 = $35,000

Loss on disposal = $35,000 − $20,000 = $15,000

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