Randolph Started Business on 1 January 20X1, on Which Date

Multiple Choice

Randolph started business on 1 January 20X1, on which date he invested in machinery and motor vehicles.He made no further acquisitions or disposals of non-current assets during the rest of 20X1 and 20X2.His policy is to depreciate all classes of non-current asset on the reducing balance basis at a rate of 25% each year. Which two of the following statements are correct?
A. Randolph's depreciation charge would have been lower in 20X2 if he had adopted a policy of straight line depreciation over four years with assumed residual values of £nil.
B. Randolph's depreciation charge would have been higher in 20X2 if he had adopted a policy of straight line depreciation over four years with assumed residual values of £nil.
C. His net profit margin was higher in year 2 than it would have been if he had adopted a policy of straight line depreciation over four years with assumed residual values of £nil.
D. His net profit margin was lower in year 2 than it would have been if he had adopted a policy of straight line depreciation over four years with assumed residual values of £nil.

A) B and C
B) A and D
C) B and D
D) A and C