Extreme Ltd is a small firm that specializes in selling bespoke PC monitors. The firm needs to
Question:
Extreme Ltd is a small firm that specializes in selling bespoke PC monitors. The firm needs to purchase an additional delivery van for its operations, as customers have recently been complaining that delivery times are too long. The management team of the firm decides to address that issue by purchasing a new van for £6,500. From the total amount of the £6,500, the firm agrees to pay £2,500 immediately in cash and the remainder in six months time (full payment is expected to be completed prior to the financial year end). The operations director estimated that the van will have a useful life of seven years, and a second-hand value of £2,083.7 at the end of its useful life. Considering that the firm uses reducing balance depreciation method (with depreciation rate of 15%),
What will be the annual depreciation expense that Extreme Ltd will record in its Income Statement at the end of the seventh year? In case you are rounding up, please select the closest option to your answer.
a. £367.71
b. £432.61
c. £217.25
d. £552.96
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey