Accounting Multiple Choice Question – 15 November 2019

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:

1. £4,960
2. £15,960
3. £24,800
4. £29,800

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not Correct
2. Not Correct
3. 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.
4. Not Correct

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