Benny buys equipment at a cost of £60,000 to use in his business on 1 September 2017. Benny decides that the asset will have a useful life of 4 years and that it will have a residual value of £6,000. Benny's policy is to depreciate on the straight line basis, charging depreciation on non-current assets from the month of purchase. What will the equipment's carrying amount be at 31 December 2019?

Question

Quizplus · Accepted Answer

The annual depreciation is (£60,000 - £6,000) / 4 = £13,500. From 1 September 2017 to 31 December 2019 is 2 years and 4 months. Depreciation for this period is 2.33 years * £13,500 = £31,455. The carrying amount is £60,000 - £31,455 = £28,545, which rounds to £28,500.

Benny Buys Equipment at a Cost of £60,000 to Use