# IGCSE Accounting Paper-2: Specimen Questions with Answers 17 - 19 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: 17 (2 of 5 Based on Passage) Show Passage

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### 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: 18 (3 of 5 Based on Passage) Show Passage

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### Write in Short

Why should Mr. Jack depreciate his machinery before selling it as scrap?

### Explanation

Any asset over a period of time becomes old and incurs wear and tear expenditure. Hence Mr. Jack should depreciate his machinery to know the book value of it in order to ascertain whether he sold the asset at profit or loss.

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