Financial Statements Paper 2 1.5D

How do i get to the answer of £8,000? Please help.

Comments

  • AAT_Team
    AAT_Team Administrator Posts: 605 ? Admin ?
    @deaniedani please post the question so our community can help you
  • Zoynal98
    Zoynal98 MAAT, AATQB Posts: 65
    edited May 2017


    Hi,


    Straight line Basis Formula:

    (Cost - Residual Value) / Useful Economic Life


    Residual Value is how much it can be sold for.

    Please see below the workings:

    Use formula above:

    (£20,000 - £4,000) / 4 Years = £4,000 (This is the Depreciation charge each year; this is fixed each year)

    Machine @ Cost 1.7.20X0 = £20,000

    Year 1 Depreciation: (£4,000) (Deduct)

    Carrying Amount @ Year 1 = £16,000
    ---------------------------------------------------------------------------------------------------------
    Machine @ Cost 30.6.20X1 = £16,000

    Year 1 Depreciation: (£4,000) (Deduct)

    Carrying Amount @ Year 2 = £12,000
    ---------------------------------------------------------------------------------------------------------
    Machine @ Cost 30.6.20X2 = £12,000

    Year 1 Depreciation: (£4,000) (Deduct)

    Carrying Amount @ Year 3 = £8,000
    ---------------------------------------------------------------------------------------------------------
    Machine @ Cost 30.6.20X3 = £8,000 (This is the Carrying Amount)

    Hope this helps.
  • Deaniedani
    Deaniedani Registered Posts: 26
    it really did, than you so much. =)
    Zoynal98
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