Fast Movers Plc Purchased a Machine on the First Day

question 43

Multiple Choice

Fast Movers Plc purchased a machine on the first day of their financial year: 1 January 2011.The machine cost £75 000 and has an expected useful life of 10 years at which time its salvage value will be £8000.An even pattern of benefits is expected to be derived from the machine.Then on 31 December 2014 (3 years later) the machine is sold for £65 000.What are the appropriate journal entries to record the disposal of the machine in line with the requirements of IASB 16?

• A) \[\begin{array} { | c | l | l | l | }
• \hline \mathrm { Dr } & \text { Proceeds from sale of machine } & 65000 & \\
• \hline \mathrm { Dr } & \text { Gain on sale of machine } & 30100 & \\
• \hline \mathrm { Cr } & \text { Machine } & & 75000 \\
• \hline \mathrm { Cr } & \text { Accumulated depreciation-machine } & & 20100 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | l | c | c | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 65000 & \\
• \hline \mathrm { Cr } & \text { Proceeds from sale of machine } & & 65000 \\
• \hline \mathrm { Dr } & \text { Carrying amount of machinery sold } & 54900 & \\
• \hline \mathrm { Cr } & \text { Accumulated depreciation-machine } & & 20100 \\
• \hline \mathrm { Cr } & \text { Machine } & & 75000 \\
• \hline
• \end{array}\]
• C) \(\begin{array}{|c|l|c|c|}
• \hline \mathrm{Dr} & \text { Cash at bank } & 65000 & \\
• \hline \mathrm{Dr} & \text { Accumulated depreciation-machine } & 20100 & \\
• \hline \mathrm{Cr} & \text { Profit on sale of machine } & & 10100 \\
• \hline \mathrm{Cr} & \text { Machine } & & 75000\\\hline
• \end{array}\)
• D) \[\begin{array} { | c | l | c | c | }
• \hline \mathrm { Dr } & \text { Accumulated depreciation-machine } & 20,100 & \\
• \hline \mathrm { Dr } & \text { Cash at bank } & 54,900 & \\
• \hline \mathrm { Cr } & \text { Machine } & & 75,000 \\
• \hline
• \end{array}\]

---

Definitions:

Distorted View

An inaccurate or twisted perception of reality, often influenced by biases or misconceptions.

Allergy Forming Molecules

Substances, often proteins, that can trigger allergic reactions by being recognized as antigens by the immune system.

Likert-Type Scale

A psychometric response scale, often comprising 5 or 7 points, used in questionnaires to collect respondents' attitudes or opinions.