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UK purchased an asset, with a useful economic life of 10 years, on 1 January 20X5 for $40,000. The asset was revalued on 31 December 20X6 to 544,000 and the directors believed its total useful economic life remained unchanged On 31 December 20X7 UK sells the asset for $50,000

How much will be recorded as a profit on disposal of the asset in UK's statement of profit or loss for the year ended 31 December 20X7?

Give your answer to the nearest $.

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Question 2

Which THREE of the following statements are true?

Options:

Tax depreciation replaces accounting depreciation when calculating the taxable profit.

Tax depreciation increases the taxable profit.

Balancing allowances increase the taxable profit.

Balancing charges increase the taxable profit.

Balancing charges reduce the taxable profit.

Balancing allowances reduce the taxable profit.

Question 3

ABC uses an aggressive approach to managing its working capital. XYZ uses a conservative approach to managing its working capital.

Which of the following is ABC more at risk of compared to XYZ?

Options:

Inventory obsolescence

Running out of cash

High finance costs

Receivables not paying on time

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