Scot Ltd uses a composite-rate depreciation rate of 8% p.a. for its office equipment. The office equipment account had a balance of $15 000 at the beginning of the period and a balance of $28 000 at the end of the accounting period. The annual depreciation charge for the period is:

Question

Quizplus · Accepted Answer

To calculate the annual depreciation charge for the period, we need to use the following formula:

Depreciation Charge = (Asset Cost - Salvage Value) x Depreciation Rate

Where:
- Asset Cost is the initial balance of the office equipment account ($15,000)
- Salvage Value is the estimated value of the asset at the end of its useful life, which is not given in the question. We assume that the office equipment has no salvage value.
- Depreciation Rate is the composite-rate depreciation rate of 8% p.a.

Using the formula, we get:

Depreciation Charge = ($15,000 - $0) x 8% = $1,200

Therefore, the annual depreciation charge for the period is $1,200. The correct answer is option C.

Scot Ltd Uses a Composite-Rate Depreciation Rate of 8% P