Caroline Limited's depreciation policy is as follows:
Motor vehicles are depreciated at the rate of 25% reducing balance.
Plant and equipment is depreciated at the rate of 20% straight line.
At 30 April 2019, Caroline Limited has the following non-current assets:
Motor vehicles: cost: £150,000, accumulated depreciation: £66,000.
Plant and equipment: cost: £220,000, estimated residual value: £20,000, accumulated depreciation: £80,000.
What will the depreciation charge for the year ended 30 April 2020 be on each of these two classes of non-current assets?

Question

Quizplus · Accepted Answer

The motor vehicles depreciation is calculated using the reducing balance method: 25% of (£150,000 - £66,000) = £21,000. The plant and equipment depreciation is calculated using the straight-line method: 20% of (£220,000 - £20,000) = £40,000.

Caroline Limited's Depreciation Policy Is as Follows