Exam 4: Accounting for Depreciation and Bad Debts

A non-current asset was purchased for £21,000 on 1 January 2020. If it is depreciated using the reducing-balance basis at the rate of 40% per annum, the net book value of the asset at 31 December 2021 will be:

A business is said to be a 'going concern' if:

Monica's trade receivables at 31 December were £35,000, including an amount of £3,000 owed by Chandler Ltd. However, she was notified that Chandler Ltd is being liquidated and that none of the debt owing to Monica will be received. Which of the following statements is true?

Joey's trade receivables at 31 December 2023 were £24,000 and this amount includes £1,200 owed by Zoom Ltd. Joey has been notified that Zoom Ltd is being liquidated and the amount of £1,200 owing to the business will not be paid. Which of the following statements is true?

Which of the following facts about depreciation is NOT true?

The annual straight-line depreciation charge on an asset is calculated as follows:

Rachel bought a motor vehicle for £25,000. The vehicle has an estimated useful life of 3 years and an estimated residual value of £2,500. If depreciation is to be provided on the straight-line basis, which of the following statements is true?

Which one of the following is the correct statement?

Ross Ltd bought a machine for £120,000. It has an expected useful life of 5 years and a residual value of £10,000. Using straight-line depreciation, how much will the depreciation charge be for each year?

Phoebe bought a laptop computer for her business that cost £2,000 and it has a net book value of £1,200 after one year. If she sells the laptop for £700 at that time, the profit / (loss) on disposal would be: