Included in Leonie's fixed assets was a piece of machinery which cost £68000 and on which depreciation of £32000 had been charged. This was sold during the year for £28000. How would this be recorded in the statement of financial position?
A) Reduce the fixed assets by £68000 and show an increase in bank of £28000
B) Reduce the fixed assets by £36000 and show a corresponding increase in the bank
C) Reduce the fixed assets by £68000, depreciation by £32000 and show an increase in the bank of £36000
D) Reduce the fixed assets by £68000, depreciation by £32000 and show an increase in the bank of £28000
E) None of the above

Question

Quizplus · Accepted Answer

The correct recording involves reducing the fixed assets by the original cost of the machinery (£68000), reducing the accumulated depreciation by the amount charged on it (£32000), and reflecting the sale proceeds by showing an increase in the bank of £28000.

Included in Leonie's Fixed Assets Was a Piece of Machinery