Cost of the car = $22,000
Asset life = 4 years
Depreciation charged at diminishing value method Depreciation rate = 100/4 = 25% of the carrying value each year
First year depreciation expense = 22000 x 0.25 = $5,500
Carrying value on 1/05/2019 = 22000 - 5500 = $16,500
Second year depreciation = 16500 x 0.25 = $4,125
Carrying value on 1/05/2020 = $12,375
Gain on sale of car = 19000 - 12375 = $6,625
Shares bought for $260,000 on 1/1/16
Share sold on 1/5/20 for $810,000
Gain on sale of shares = 810000 - 260000 = $550,000
Total gain in the year = 550000 + 6625 = $556,625
Unspoiled capital loss from prior year = $210,000
Total capital gain = 556625 - 210000 = $346,625
Please like the solution if satisfied and drop a comment in case of any doubt.
Thankyou
Get Answers For Free
Most questions answered within 1 hours.