A firm depreciates its productive plant and equipment at the rate of 10% per annum, using the reducing balance method. It is the firm’s policy to charge a full year’s depreciation on fixed assets in the year in which they are acquired.
Given the above, what is the depreciation charge, to the nearest pound, to be shown in the 1995 accounts in relation to an item of plant, with no residual value, acquired in 1991 for £10,000?
Select ONE answer:
- £591
- £656
- £729
- £1,000
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 2
- Not Correct
- Cost in 1991 £ 10,000 . NBV at 31 December 1994 NBV £6,561 – 1995 depreciation charge = 10% of NBV £656
- Not Correct
- Not Correct
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