IGCSE Accounting Paper-2: Specimen Questions with Answers 18 - 20 of 103

Passage

Mr. Jack purchases machinery at a cost of £100000. The life of the machinery is said to be 3 years At the end of 3 years the machinery is sold as scrap at £20000.

Question number: 18 (3 of 5 Based on Passage) Show Passage

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Short Answer Question▾

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Calculate the profit or loss of Mr. Jack if he depreciates the machinery on Written down value method

Explanation

Profit of £489

Deprecation in the books of Mr. Jack on the basis of written down value method

shows Deprecation in the books of Mr. Jack on the basis of written down value method

PARTICULARS

AMOUNT

Cost of asset in year 1

100000

Less Depreciation@42%

42000

Book value at the end of year 1

58000

Book value at the beginning of year 2

58000

Less Depreciation@42%

24360

Book value at the end of year 2

33640

Book value at the beginning of year 3

33640

Less Depreciation@42%

14129

Book value at the end of year 3

19511

Scrap value

20000

Profit = Scrap Value - Book Value

489

Question number: 19 (4 of 5 Based on Passage) Show Passage

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What are the methods available to Mr. Jack to calculate depreciation on the machinery?

Explanation

Mr. Jack can use any of the two widely used methods to calculate depreciation on his machinery. The methods are:

(i) Straight Line Method

(ii) Written down value Method

Question number: 20 (5 of 5 Based on Passage) Show Passage

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How will Mr. Jack ascertain the percentage of written down value on the machinery?

Explanation

Mr. Jack can ascertain the percentage of written down value using the formula

Where R = Percentage rate, N = Years, RV = Residual/Scrap value