ACCA FA · Chapter 6 · Question 3 of 12
A company with a 31 December year end bought equipment on 1 April 20X5 for $36,000. Its useful life is 8 years with a residual value of $4,000. Depreciation is charged on a straight-line basis, pro rata to the number of months owned. What is the depreciation charge for the year ended 31 December 20X5?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $3,000
Explanation
Annual depreciation = ($36,000 - $4,000) / 8 = $4,000. The asset was owned for 9 months, so the charge = $4,000 x 9/12 = $3,000. Ignoring the residual value gives $36,000 / 8 x 9/12 = $3,375, and a full year's charge is $4,000.
More Tangible and intangible non-current assets MCQs
- Q5A company with a 31 December year end bought a machine on 1 January 20X2 for $60,000. It is depreciated at 10% per year on cost, with a…
- Q6A business traded in an old van for a new van with a list price of $42,000. The dealer gave a part-exchange allowance of $9,500 and the…
- Q7A building with a cost of $400,000 and accumulated depreciation of $80,000 is revalued to $500,000. What amount should be credited to the…
- Q8A building originally cost $600,000 and had a useful life of 50 years. After 20 years it was revalued to $720,000, with its remaining…
- Q9A machine was bought on 1 January 20X1 for $90,000 with a useful life of 10 years and no residual value, depreciated on a straight-line…