# Depreciation/Question

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Registered Posts: 17 Dedicated contributor 🦉
Hi everyone,
This question is from the Green light but still I am struggling with the calculation.

On 1 July 20X1 the balance b/f on a trader's property, plant and equipment (PPE) account was £26,400. On 1 October 20X1 she sold an asset which had cost £8,200 for cash proceeds of £4,800. On 1 January 20X2 she bought a replacement asset for £10,600. She depreciates PPE on a straight line basis at 10% per annum on cost at the year end. Calculate the depreciation charge for the year ended 30 June 20X2

Does anyone know how to calculate the depreciation charge?

All this answers were wrong btw 1060 , 1880, 735, 667, 3700....

I just got the answer 2880(1,820+1,060)

(26,400-8,200) * 10% = 1,820
10,600 * 10% = 1,060

Elena

• Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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I just got the answer 2880(1,820+1,060)

I got this. Unless I'm reading the question wrong..
• Registered Posts: 585 Epic contributor 🐘
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the answer comprises of three parts

1 PPE held for the whole year (26400 - 8200) = 18200 * 10% = £1 820
2 assets sold used for 3 months (8200 * 10%)=820 /12 * 3 = £ 205
3 New asset bought used for 6 moths (10600*10%)/12&*6 = £ 530

total depreciation expense £2 555
• Registered Posts: 258 Dedicated contributor 🦉
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I calculated it differently, but get the same answer of £2,880

Opening Gross Book Value £26,400
less disposals £ 8,200

Closing Gross Book Value £28,800

Depreciation at 10% of closng GBV £2,880
• Registered Posts: 553 Epic contributor 🐘
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Hi

I got £2,880 as well.

In this example, there would be a full years charge in the year of acquisition ( regardless of at what point in the year it was purchased) and no charge in the year of disposal.

Neil
• Registered Posts: 1,189 Beyond epic contributor 🧙‍♂️
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