HELP ON AAT LEVEL 4 FINANCIAL STATEMENTS PRACTICE ASSESSMENT 2 TASK 5 PART (D)

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Ateeb92
Ateeb92 Registered Posts: 8
in AAT Level 4 (Level 8 in Scotland)
Leigh field Ltd purchases a machine for £20000 on 01.07.20X0. The machine is estimated to have a useful economic life of 4 years, after which it can be sold for £4000. The company depreciates using straight line method, charging a full year's depreciation in both of years purchases and sales. Prepares its financial statements to 30th June each year.

What will be the carrying amount of the machine at 30th June 20X3?

I keep getting £4000 and the answer is £8000.

Thanks.

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  • Clayy1990
    Clayy1990 Registered Posts: 35 Dedicated contributor 🦉
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    Good Morning,
    The depreciation is worked out at £4,000 p/a.
    The item is bought on the 01.07.20X0 and therefore the year end for this is 30.06.20X1
    30.06.20X1 = carrying amount is £20,000 - £4,000 = £16,000
    30.06.20X2 = carrying amount is £16,000 - £4,000 = £12,000
    30.06.20X3 = carrying amount is £12,000 - £4,000 = £8,000

    Hope this helps .

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