Skip to content

ACCA Applied Knowledge · Financial Accounting · Depreciation

At 1 January 20X2 Vance Co had plant at cost of $200,000 and accumulated depreciation of $90,000. During the year it sold plant that cost $50,000 (accumulated depreciation $30,000) for $25,000 and bought new plant for $70,000. Depreciation is 20% per annum on the straight-line basis on cost of plant held at the year end, with no time apportionment. What is the closing accumulated depreciation balance?

Closing accumulated depreciation is $104,000. Year-end cost is $220,000, so the charge is $44,000. Opening $90,000 less $30,000 released on the disposal, plus the $44,000 charge, gives $104,000.

  1. A$74,000
  2. B$84,000Correct
  3. C$104,000
  4. D$114,000

Explanation

Closing cost = 200,000 - 50,000 + 70,000 = $220,000. Depreciation charge = 20% x 220,000 = $44,000. Accumulated depreciation = 90,000 - 30,000 + 44,000 = $104,000. Hence the correct option is $104,000; $84,000 results from omitting the new plant... actually from deducting 50,000 incorrectly.

Did you get it right without looking?

One question tells you little. A timed set on Depreciation shows your real accuracy, how long you take and where you lose marks.

Practise DepreciationFree diagnostic mock

More Depreciation questions