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Question
On 1st October 2014, a truck was purchased for ₹ 8,00,000 by Laxmi Transports Ltd. Depreciation was provided @ 15% p.a. under diminishing balance method. On 31st March 2017, the above truck was sold for ₹ 5,00,000. Accounts are closed on 31st March every year. Find out the profit or loss made on the sale of the truck.
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Solution
Calculation of Profit or loss on sale of the truck:
| Date | Particulars | ₹ |
| 01.10.2014 | A truck purchased | 8,00,000 |
| 31.03.2015 | Less: Depreciation @ 15% for 6 months | 60,000 |
| 01.04.2015 | Book value | 7,40,000 |
| 31.03.2016 | Less: Depreciation @ 15% | 1,11,000 |
| 01.04.2016 | Book value | 6,29,000 |
| 31.03.2017 | Less: Depreciation @ 15% | 94,350 |
| 01.04.2017 | Book value | 5,34,650 |
Book value – selling price = Loss
5,34,650 – 5,00,000 = 34,650
∴ Loss on sale of truck = ₹ 34,650
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