IGCSE Accounting Paper-2: Specimen Questions with Answers 18 - 19 of 189

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 18 (3 of 5 Based on Passage)

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

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Explanation

Profit of £ 489

Deprecation in the Books of Mr. Jack on the Basis of Written down Value Method
PARTICULARSAMOUNT
Cost of asset in year 1100000
Less Depreciation@42%42000
Book value at the end of year 158000
Book value at the beginning of year 258000
Less Depreciation@42%24360
Book value at the end of year 233640
Book value at the beginning of year 333640
Less Depreciation@42%14129
Book value at the end of year 319511
Scrap value20000
Profit = Scrap Value - Book Value489

Question 19 (4 of 5 Based on Passage)

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Calculate the profit or loss of Mr. Jack if he depreciates the machinery on Straight line method assuming the percentage of depreciation is 25%

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Explanation

Loss of £ 5000

Deprecation in the Books of Mr. Jack on the Basis of Straight Line Method
PARTICULARSAMOUNT
Cost of asset in year 1100000
Less Depreciation@25%25000
Book value at the end of year 175000
Book value at the beginning of year 275000
Less Depreciation@25%25000
Book value at the end of year 250000
Book value at the beginning of year 350000
Less Depreciation@25%25000
Book value at the end of year 325000
Scrap value20000
Loss = Book Value - Scrap Value-5000

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