Question 1

**Section A**

During the year, a company sold a machine for cash. The machine originally cost $80,000 and had accumulated depreciation of $55,000. The company recorded a loss on disposal of $5,000 in the statement of profit or loss.

What is the cash inflow from investing activities regarding this disposal? (Enter numbers only)

Accepted Answer

Calculate the carrying amount of the machine. Use the loss on disposal to work backwards to find the cash proceeds. Proceeds = Carrying Amount - Loss.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Adding the loss to the carrying amount instead of subtracting it, resulting in $30,000.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

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