Day: March 22, 2024

Alex plc purchases a machine for which the supplier’s list price is £18,000.

Alex plc pays £13,000 in cash and trades in an old machine which has a carrying amount of £8,000.

It is the company’s policy to depreciate such machines monthly at the rate of 10% per annum on cost.

The carrying amount of the new machine after one year is?

Select ONE answer:

1. £16,200
2. £18,000
3. £18,900
4. £21,000

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 90% = £16,200
2. Not correct
3. Not correct
4. Not correct

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