A non-current asset was purchased for £21,000 on 1 January 2020. If it is depreciated using the reducing-balance basis at the rate of 40% per annum, the net book value of the asset at 31 December 2021 will be:
A) £4,200.
B) £7,560.
C) £5,040.
D) £12,600.

Question

Quizplus · Accepted Answer

The reducing-balance method applies depreciation on the remaining book value each year. For 2020, depreciation is £21,000 * 40% = £8,400, leaving a book value of £12,600. For 2021, depreciation is £12,600 * 40% = £5,040, leaving a book value of £7,560.

A Non-Current Asset Was Purchased for £21,000 on 1 January