Non-current Investments costing ₹ 30,000 were sold for ₹ 40,000 during the year. Gain on sale ofInvestments was credited to Capital Reserve
Question
Non-current Investments costing ₹ 30,000 were sold for ₹ 40,000 during the year. Gain on sale ofInvestments was credited to Capital Reserve
Solution
Step 1: Determine the initial cost of the non-current investments. In this case, the investments were purchased for ₹ 30,000.
Step 2: Calculate the gain on the sale of investments. The investments were sold for ₹ 40,000, which means there was a gain of ₹ 10,000 (₹ 40,000 - ₹ 30,000).
Step 3: Identify where the gain on the sale of investments was credited. In this case, it was credited to the Capital Reserve.
Therefore, the non-current investments costing ₹ 30,000 were sold for ₹ 40,000, resulting in a gain of ₹ 10,000. This gain was then credited to the Capital Reserve.
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