Question 1

A company purchases a machine on 1 April 20X1 for $60,000. It has an estimated useful life of 5 years and a residual value of $5,000. The company uses the straight-line method of depreciation and charges depreciation on a pro-rata basis (monthly). What is the depreciation expense for the year ended 31 December 20X1? (Enter numbers only)

Accepted Answer

Calculate the annual depreciation first, then apportion it for the number of months the asset was owned in the year.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to deduct the residual value, or calculating for a full 12 months instead of 9.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 2

More questions from this exam