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ACCA Applied Knowledge · Financial Accounting · Tangible non-current assets

At 1 January Year 5, Kestrel Co had plant at cost of $400,000 with accumulated depreciation of $150,000. During the year it bought plant costing $90,000 and sold plant that had cost $60,000 with accumulated depreciation of $45,000. The depreciation charge for the year was $55,000. What is the carrying amount of plant at 31 December Year 5 to be shown in the note?

The carrying amount is $270,000, being closing cost of $430,000 less closing accumulated depreciation of $160,000.

  1. A$295,000Correct
  2. B$280,000
  3. C$310,000
  4. D$325,000

Explanation

Cost: 400,000 + 90,000 - 60,000 = 430,000. Accumulated depreciation: 150,000 + 55,000 - 45,000 = 160,000. Carrying amount = 430,000 - 160,000 = 270,000. Check against the options: opening carrying amount is 250,000; add 90,000 = 340,000; less disposal carrying amount 15,000 = 325,000; less depreciation 55,000 = 270,000. None equals 295,000, so the key must be corrected to 270,000.

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