Question

Person buys a car on 1/05/2018 for $$22k Then they sell it on 1/05/2020 for $19k...

Person buys a car on 1/05/2018 for $$22k
Then they sell it on 1/05/2020 for $19k

Buy shares 1/1/16 for $260k
Sells shares 1/5/20 for $810k
Company has TO of 1.5M

30/6/19 unspoiled cap loss from prior year of $210k


Calc with diminishing value method
All asset has life of 4years



calculate capital gain/loss
Business   Accounting   
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Homework Answers

Answer #1

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

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