Day: March 7, 2024

Alex Trading plc purchased a car for £18,000 on 1 January 2020.

The car was traded in on 1 January 2022.

The new car has a list price of £30,000 and the garage offered a part-exchange allowance of £5,000.

The company provides depreciation on cars using the reducing balance method at a rate of 25% per annum.

What loss on disposal will be recognised in the income statement of Alex Trading plc for the year ended 31 December 2022?

Select ONE answer:

1. £5,125
2. £8,500
3. £10,125
4. £11,175

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 1

1. Correct – £18,000 x 75% x 75%- 5,000 = £5,125 loss
2. Not correct
3. Not correct
4. Not correct

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