Day: March 18, 2024

A plant account is shown below:

PLANT

DR  1 January 2023  Balance Plant Purchased 2021  £380,000

DR  1 April 2023  Cash – plant purchased  £51,000

DR  Total  £431,000

CR  1 October 2023  Disposal – Cost of plant sold  £30,000

CR  31 December 2023  Balance  £401,000

CR  Total  £431,000

The company’s policy is to charge depreciation on plant monthly at 20% per year on the straightline basis.

What should the company’s plant depreciation charge be in the income statement for the year

ended 31 December 2023?

Select ONE answer:

1. £82,150
2. £79,150
3. £77,050
4. £74,050

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 – (Plant held all year (380,000 – 30,000) x 20% = £70,000 + New plant (51,000 x 20%x 9/12) = £7,650 – Plant disposed of (30,000 x 20% x 9/12) = £4,500 ==> £82,150
2. Not correct
3. Not correct
4. Not correct

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