A Company purchases a furniture for PKR Rs 5,500,000. It has an estimated residual value (salvage value) of PKR Rs 400,000 and a useful life of ten years and it has been bought on month of February. However, they want to trade in for a new furniture worth of PKR Rs 6,000,000.

1. Company calculates deprecation at 150% Declining Method for the furniture in first 6 years and from 7th year it has been switched to straight line method.
2. The furniture owner allow company a trade in allowance of PKR Rs 500,000 for an old furniture. Whether there will be a loss or gain on sale of furniture and how much money company will pay to acquire new furniture.