Accounting Multiple Choice Question – 4 April 2024

Alex plc acquired a new truck on 1 July 2014 for £99,640 including VAT at 17.5%.

The company depreciates all vehicles straight line at 20% per annum on a monthly basis.

What is the carrying amount of Alex plc’s truck at 31 December 2014?

Select ONE answer:

1. £89,676
2. £84,800
3. £76,320
4. £67,840

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. Correct – VAT on vehicles except for cars is treated as input tax, so the truck’s cost in the ledger accounts is £99,640 x 40/47 = £84,800 (B). This is depreciated at 20% per annum for 6 months, a charge of £8,480. Hence the carrying amount at the year-end is £84,800- £8,480 = £76,320
4. Not correct

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