Q.Joy and Co., purchased Machinery on 1st April 2016 for ₹ 75,000. On 31st March 2018, it sold the machinery for ₹ 62,000. Depreciation is to be provided every year at 10% p.a. on the Fixed Instalment method. Accounts are closed on 31st March every year. Find out the Profit or Loss on sale of machinery.

On selling a depreciable asset, its book value as on the date of sale (cost less accumulated depreciation to that date) is compared against the sale proceeds — proceeds exceeding book value give a Profit on Sale, and book value exceeding proceeds gives a Loss on Sale. Where a Provision for Depreciation Account is maintained, a separate Asset Disposal Account is opened to bring together the asset's original cost, its accumulated depreciation, and the sale procee …