On 1 January 2015, a company which prepares financial statements to 31 December each year acquires...

 

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On 1 January 2015, a company which prepares financial statements to 31 December each year acquires a machine on a finance lease. The fair value of the machine on 1 January 2015 is £280,000 and useful economic life is six years. The lease period is five years and the company is required to make five lease payments of £60,000 each. These payments fall due on 1 Jan each year. Discount rate is 4%. The company uses the sum of digit method in the allocation of finance charge. Identify depreciation charge for the year ending for 31 Dec 2015. £55,560 £60,000 O £46,300 £56,000 On 1 January 2015, a company which prepares financial statements to 31 December each year acquires a machine on a finance lease. The fair value of the machine on 1 January 2015 is £280,000 and useful economic life is six years. The lease period is five years and the company is required to make five lease payments of £60,000 each. These payments fall due on 1 Jan each year. Discount rate is 4%. The company uses the sum of digit method in the allocation of finance charge. Identify depreciation charge for the year ending for 31 Dec 2015. £55,560 £60,000 O £46,300 £56,000

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4 Option a is correct ... View the full answer