The following information relates to one of several fixed assets acquired by a firm on 1 January 1996.
- Cost £ 29,800
- Estimated scrap value £ 5,000
- Estimated useful economic life 8 years
If all of the firm’s fixed assets are depreciated at the rate of 20% per annum, using the reducing balance method, the total depreciation charged on the above asset up to 31 December 2003 will be:
Select ONE answer:
- £4,960
- £15,960
- £24,800
- £29,800
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 3
- Not Correct
- Not Correct
- 1 January 1996 to 31 December 2003 = 8 years = the estimated useful life of the asset. The total depreciation to be charged over the estimated useful life of any fixed asset (irrespective of depreciation method used) = Cost – Estimated scrap value = £29,800 – £5,000 = £24,800. Therefore, the total depreciation charged on this asset up to 31 December 2003 is £24,800. You will get the same answer if you work out the depreciation year by year.
- Not Correct
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