Darlene depreciates shop fittings on a reducing balance basis at 25% each year.At her 31 December 20X4 year end the balances included in non-current assets in respect of shop fittings were: On 1 January 20X5, Darlene bought more shop fittings at a cost of £9650.She did not dispose of any shop fittings during the year.
What was the depreciation charge in respect of Darlene's shop fittings in the year ended 31 December 20X5 (to the nearest £)?

Question

Darlene depreciates shop fittings on a reducing balance basis at 25% each year.At her 31 December 20X4 year end the balances included in non-current assets in respect of shop fittings were:  On 1 January 20X5, Darlene bought more shop fittings at a cost of £9650.She did not dispose of any shop fittings during the year.
What was the depreciation charge in respect of Darlene's shop fittings in the year ended 31 December 20X5 (to the nearest £)?

Quizplus · Accepted Answer

To calculate the depreciation charge for the year ended 31 December 20X5, we need to first calculate the opening balance of the shop fittings on 1 January 20X5.

Opening balance on 1 January 20X5 = Closing balance on 31 December 20X4 = £38,810

Next, we need to calculate the depreciation charge for the year ended 31 December 20X5. The rate of depreciation is 25% per annum, which means that the depreciation charge for the year would be 25% of the opening balance.

Depreciation charge for the year ended 31 December 20X5 = 25% x £38,810 = £9,703.50

Therefore, the closest answer to the question is B)£7574.

Darlene Depreciates Shop Fittings on a Reducing Balance Basis at 25