Tag: Straight-Line

A company has two fixed assets. Details are given in the table.

• Asset X: date bought 1 Jan Year 1, cost £10,000, depreciation method 5 years straight-line, residual value £2,000
• Asset Y: date bought 1 Jan Year 1, cost £20,000, depreciation method 20% reducing balance, residual value £NIL

What is the depreciation charge for the year ended 31 December, Year 2?

Select ONE answer:

1. £4,800
2. £5,200
3. £5,600
4. £6,000

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 – X = £10k – £2k / 5 = £1.6k; Y = (£20k – £4k) * 20% = £3.2 == > £4.8k
2. Not correct
3. Not correct
4. Not correct

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