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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.
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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