Tag: Topic 3

Alex plc bought a car on 1 January 2017 for £10,000 and decided to depreciate it at 30% per annum on a reducing balance basis.

It was disposed of on 1 January 2019 for £6,000.

The net effect on the income statement for the year ended 31 December 2019 is a credit of?

Select ONE answer:

1. £1,100
2. £3,000
3. £4,000
4. £5,100

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 – (£10,000 x 70% x 70%) – £6,000 = £1,100
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex plc purchased some plant and equipment on 1 July 2021 for £40,000.

The estimated scrap value of the plant in ten years’ time is estimated to be £4,000.

Alex plc’s policy is to charge depreciation monthly on the straight-line basis.

The depreciation charge on the plant in Alex plc’s income statement for the reporting period of twelve months ending 30 September 2021 should be?

Select ONE answer:

1. £900
2. £1,000
3. £2,700
4. £3,000

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 – (£36,000/120 x 3 = £900
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex Ltd’s policy for depreciation of its plant and machinery is to charge depreciation monthly at 20% per year on cost.

Alex Ltd’s plant and machinery account for the year ended 30 September 2023 is shown below:

PLANT AND MACHINERY

Dr Entries =
2022
1 Oct Balance (all plant purchased after 20X0) £200,000

2023
1 Apr Cash purchase of plant £50,000

Total £250,000

                        Cr Entries = 
                        2023
                        30 Jun  Disposal account                                £40,000
                        30 Sep  Balance                                         £210,000

                        Total                                                               £250,000

What should be the depreciation charge in Alex Ltd’s income statement for plant and machinery (excluding any profit or loss on the disposal) for the year ended 30 September 2023?

Select ONE answer:

1. £43,000
2. £51,000
3. £42,000
4. £45,000

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 – (Plant held all year (200,000 -40,000) x 20% = £32,000 + Disposal 40,000 x 20% 9/12 = £6,000 + Additions 50,000 x 20% x 6/12 = £5,000 ==> £43,000
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.