# 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

### Write in Short

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

### Explanation

Profit of £489

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

### Write in Short

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

### Write in Short

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