Accounts and finance

Table of Contents

1. Topic pack - Accounts and finance - introduction
2. 3.1 Sources of finance - notes
3. 3.1 Sources of finance - questions
4. 3.2 Investment appraisal - notes
5. Investment appraisal
6. 3.2 Investment appraisal - questions
7. 3.3 Working capital - notes
8. 3.3 Working capital - questions
9. 3.4 Budgeting - notes (HL only)
10. 3.4 Budgeting - questions
11. 3.5 Final accounts - notes
12. 3.5 Final accounts - questions
    1. Final accounts - short answer questions
    2. Capital and revenue expenditure - short answer questions
    3. Profit and loss accounts - short answer questions
    4. The profit and loss account - numerical questions
    5. Balance sheets - short answer questions
    6. The balance sheet - report
    7. The balance sheet - numerical questions
    8. Depreciation - short answer questions
    9. Depreciation - numerical questions
    10. Company accounts - interactive questions
    11. Company accounts - rebuild a set of accounts
    12. Uses and limitations of published accounts - memorandum
    13. Stock valuation - numerical questions
    14. GM - are they losing it?
    15. Between a Rok and a hard place.
    16. Toyota out of reverse gear
13. 3.5 Final accounts - simulations and activities
14. 3.6 Ratio analysis - notes
15. 3.6 Ratio analysis - questions
16. 3.6 Ratio analysis - simulations and activities
17. Printable version

Depreciation - numerical questions

Question 1

The manager of Collison Ltd has purchased a new price of equipment to help speed up the production line. The equipment cost $50,000 and is expected to last for five years. At the end of this period the equipment can be traded in for the value of $4000.

Required

You are required to calculate the depreciation for each year on the asset using both straight line and reducing balance methods. Show the net book value for the van at the end of each of the 5 years for each method (assume that 40% is to be used for the reducing balance method).

Question 2

Fiona Palmer, a sole trader purchases a delivery van for the sum of $12,000. It has as estimated life of 6 years and a trade-in value of $3,000.

Required

You are required to calculate the annual depreciation on the van using both straight-line and reducing balance methods.

Show the balance remaining - the net book value - on the van at the end of each of the 6 years for each method (assume that 20% is to be used for the reducing balance method).