Alex plc had computer equipment with a carrying amount at 1 April 2022 of £150,000.
On that date it traded in a computer which had cost £24,000 on 1 April 2020 for a new computer
which cost £34,600, handing over a cheque in full settlement for £18,000.
Alex plc depreciates computers at 40% per annum on the reducing balance.
How much depreciation will be charged in Alex plc’s income statement for the year ended 31 March 2023 in respect of computers?
Select ONE answer:
- £56,544
- £66,640
- £70,384
- £73,840
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
- Not correct
- Not correct
- Correct – Carrying amount of computer traded in = £24,000 x 60% x 60% = £8,640. Carrying amount of remaining computers is therefore 150,000+ 34,600- 8,640 = £175,960. Depreciation on these is (175,960 x 40%) = £70,384 (3)
- Not correct
This work is licensed under a Creative Commons Attribution 4.0 International License.
You must be logged in to post a comment.