Accounting 0452 · IGCSE · Accounting for depreciation and disposal of non-current assets

Accounting for depreciation and disposal of non-current assets — practice question

Zak has been charging depreciation on his machinery at $20\%$ per annum by the straight-line method. At $31$ December $2018$ the statement of financial position showed: - machinery at cost: $\$30000$ - depreciation to date: $\$12000$ - net book value: $\$18000$ On $31$ December $2019$ Zak was thinking about calculating the yearly depreciation at $20\%$ per annum on the net book value of the machinery. Which statement is true?

  • Adepreciation would be $\$3600$ applying the consistency principle
  • Bdepreciation would be $\$3600$ applying the prudence principle
  • Cdepreciation would be $\$6000$ applying the consistency principle
  • Ddepreciation would be $\$6000$ applying the prudence principle

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