Q.Profit earned on the sale of an old machine, sold for more than its book value, is an example of:
(A) Revenue Profit
(B) Capital Profit
(C) Deferred Revenue Expenditure
(D) A Revenue Receipt

Profit on sale of a fixed asset arises outside the business's regular trading activity — the sale of goods — which is exactly what separates a Capital Profit from a Revenue Profit.

Capital Profit/Loss arises from a transaction OTHER than the regular sale of goods — most commonly on the sale of a fixed asset. Selling an old machine for more than its book value is exactly this: a gain outside the ordinary trading activity of buying and selling goods.

Option-by-option analysis:

• (A) Incorrect — Revenue Profit arises from the regular sale of goods, not from selling a fixed asset.
• (B) Correct — this is precisely a Capital Profit. …