Accounting 9706 · AS & A Level · Accounting for non-current assets

Accounting for non-current assets — practice question

The details below concern the non-current assets of a business established three years ago. Cost at the beginning of year 1: $10000$ Accumulated depreciation at the end of year 3: $6000$ Draft profit for year 3: $18000$ While working out the draft profit for year 3, depreciation was applied consistently by the straight-line method. Before the accounts were completed, the business chose to alter the depreciation method for year 3 to the reducing balance method at a rate of $25\%$ per annum. What was the adjusted profit for year 3?

  • A$16000$
  • B$17500$
  • C$18500$
  • D$19000$

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