Mavis owns a launderette. She installed all the washing machines three years ago, on 1 January 20X3, at a cost of £12 800. She depreciates the washing machines at the rate of 15% per annum on the reducing balance basis.
What is the depreciation charge for the washing machines in the income statement in her accounting year to 31 December 20X6 (to the nearest £).

On 12 September 20X4 Marcus buys a new delivery vehicle for use in his mobile pizza delivery business. Marcus’s policy is to depreciate vehicles at 20% on the straight line basis, with a charge to depreciation for each full month of ownership. He estimates that he will be able to sell the vehicle in 5 years’ time for £300.

What is the depreciation charge in respect of this vehicle in Marcus’s income statement for the year ending 28 February 20X5 (to the nearest £)?

Minnie’s retail business is doing so well that she decides to rent additional shop premises. She has to buy new shelving, a till and other fittings for the new shop, and during her accounting year to 31 January 20X5 she spends £10 420 on these items. Her accounts to 31 January 20X4 showed the following balances in respect of shop fittings:


Shop fittings at cost............... £23 700
Less: depreciation.................(£12 440)
Carrying amount....................£11 260

Minnie depreciates shop fittings at 20% per year on the reducing balance basis.

How much depreciation is shown in Minnie’s income statement for the year ending 31 January 20X5 in respect of shop fittings?

Mohin has a plumbing business. He buys a new van for £22 000 but it needs modification before he can use it. He pays a welder £904 to install racks inside the van for his equipment, and pays £320 to a sign firm to have the business name and contact details sprayed on the side of the van.

Mohin adopts a policy of straight line depreciation, with a full year’s depreciation included in the income statement in the year of acquisition of an asset. He buys the van in his accounting year to 31 December 20X4. He estimates that he will be able to sell the van after 5 years for approximately £6000.

What is the carrying amount of the van in Mohin’s statement of financial position at 31 December 20X4 (to the nearest £)?

Nadine runs a florist’s business from two branches. The volume of trade has been poor at one of the shops for some time now, and Nadine decides to sell the shop and its fittings. She originally bought the shop, freehold, on 1 January 20X2 for £115 000. She has depreciated it at 2% per year on the straight line basis.

The shop fittings were bought at the same time for £25 000, and have been depreciated on the straight line basis over ten years, with an assumption that they would be worthless by the end of the ten year period.

On 1 January 20X8 Nadine accepts an offer of £128 500 for the shop and its fittings.
What is Nadine’s profit or loss on the sale of the shop and fittings?

Nadya disposes of a fixed asset on 13 May 20X6 for £10 000. The asset was bought on 5 February 20X4 for £23 600. Nadya applied the straight line depreciation method of 20% per year, with the assumption that the asset would be sold for £2500 after 5 years. Nadya’s policy is to calculate depreciation for each full month of ownership in the accounting year.

What is her profit or loss on sale (to the nearest £)?

Nelson depreciates the cars owned by his business on the reducing balance basis at 30% per year, with a full year’s depreciation in the year of acquisition and none in the year of disposal. At 31 December 20X6 the totals shown for cars in his statement of financial position are:


Cars at cost...................£42 450
Less: depreciation..........(£23 772)
Carrying amount.............£18 678

During his financial year to 31 December 20X7 Nelson buys a new car for £15 200. He sells one of the existing cars for £2200; it had cost him £12 600 on 1 January 20X2.

What is the figure for cars at cost to be shown in Nelson’s statement of financial position at 31 December 20X7?

Nelson depreciates the cars owned by his business on the reducing balance basis at 30% per year, with a full year’s depreciation in the year of acquisition and none in the year of disposal. At 31 December 20X6 the totals shown for cars in his statement of financial position are:


Cars at cost...................£42 450
Less: depreciation..........(£23 772)
Carrying amount.............£18 678

During his financial year to 31 December 20X7 Nelson buys a new car for £15 200. He sells one of the existing cars for £2200; it had cost him £12 600 on 1 January 20X2.

What is the profit or loss on the sale of Nelson’s car (to the nearest £)?

Nelson depreciates the cars owned by his business on the reducing balance basis at 30% per year, with a full year’s depreciation in the year of acquisition and none in the year of disposal. At 31 December 20X6 the totals shown for cars in his statement of financial position are:


Cars at cost...................£42 450
Less: depreciation..........(£23 772)
Carrying amount.............£18 678

During his financial year to 31 December 20X7 Nelson buys a new car for £15 200. He sells one of the existing cars for £2200; it had cost him £12 600 on 1 January 20X2.

What is the carrying amount of cars to be shown in Nelson’s statement of financial position at 31 December 20X7 (to the nearest £)?

Otto has a car held at carrying amount of £4626 in his accounts. If he sells the car for £4000 he makes a loss of £626. Using the accounting equation, what is the effect on his assets, capital and liabilities?