A second-hand car bought for 2,00,000 is sold for 1,40,000 after two years. If depreciation is charged at 10% a year on the straight-line method, what is the profit or loss on sale?
Correct answer D. 20,000 Loss
Explanation
Straight-line depreciation is 20,000 a year, so after two years the book value is 1,60,000; selling for 1,40,000 therefore gives a loss of 20,000.
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