Book Value Formula Accounting

ACCOUNTING BASICS PLEASE HELP ME!!?

You are given the following data from the accounts for year ended 31 Dec X8

Gain on sale of plant in X8£6
Purchases of plant during year£30
Net book value of plant at 31 Dec X8£155
Cash received from sale of plant £21
Net book value of plant at 1 Jan X8£150

The depreciation expense in X8 was:

the answer is £10

Also i know you need formulas for this, could you give me as many formulas as you can for this and COGS etc etc?

‘Formula’ won’t help .. you have to UNDERSTAND how to arrive at the answer …

This is a ‘generic’ income/expenditure type question.
In such a case, ‘end’ == ‘start’ – ‘sale’ + ‘purchases’

Here we have 155 = (150 – 21 + 30) … and it dosn’t add up (155 <> 159 … difference of 4)

But you have a clue in the question .. you are asked for the depreciation .. and there’s another clue (‘gain on sale’) …

To get the sum to balance, plainly you have to SUBTRACT the Depreciation and ADD the gain …

So you get 155 = (150 – 21 + 30) – D + 6

The tricky bit is to understand what the ‘gain’ means == in this case what they are saying is that the plant sold for 21 was UNDERVALUED at the start … i.e. the total at the start should have been 156 NOT 150 … (this is why you add the 6 in)

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