- 3 Marks
FR – May 2018 – L2 – Q7c – Property, Plant, and Equipment (IAS 16)
Calculate the gain or loss on the disposal of an old equipment traded in for a new one, in accordance with IAS 16.
Question
Odeda Limited operates its business with plant and equipment that qualified under IAS 16 as property, plant, and equipment. On January 1, 2016, the cost of the company’s plant was N4,000,000, and the accumulated depreciation was N1,600,000. On January 2, 2016, the company bought a new equipment at the cost of N1,000,000, and the equipment supplier accepted an old equipment owned by Odeda Limited in part exchange for a value of N80,000. The equipment originally cost N600,000, and its accumulated depreciation is N500,000.
You are required to calculate the gain or loss on the disposal of the old equipment.
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