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Discuss how this statement relates to the problem

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Question - A motor vehicle was sold on the 30th of September 2014. The proceeds from the sale were $21,000 in cash. The Balance Sheet as at the 30th June 2014 reported the Motor Vehicle at a historical cost of $45,000 and the loss of the future benefit was $21,600. The motor vehicle is depreciated using the straight-line method. The rate of depreciation was 12% of the historical cost.

'A profit or loss on the sale of a non-current asset is simply an over or understatement of depreciation'. Discuss how this statement relates to the problem.

Reference no: EM133016807

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