Financial Statements Paper 2 1.5D

Deaniedani

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

AAT_Team

@deaniedani please post the question so our community can help you

Zoynal98

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
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Machine @ Cost 30.6.20X1 = £16,000

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

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

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

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

Hope this helps.

Deaniedani

it really did, than you so much.