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The following is the income statement for Nikov and Co. for the year ended 31 December 2014,

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The following is the income statement for Nikov and Co. for the year ended 31 December 2014, along with information relating to the preceding year. Income statement for the year ended 31 December

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Required:Analyse the performance of the business for the year to 31 December 2014 in so far as the information allows.

Transcribed Image Text:

2013 2014 £000 £000 Sales revenue 420.2 382.5 Cost of sales (126.1) (114.8) Gross profit Salaries and wages Selling and distribution costs 294.1 267.7 (92.6) (98.9) (22.0) (19.7) (4.8) (2.9) (10.3) (3.1) (4.3) (86.4) (75.4) (22.0) Rent and rates Bad debts written off (4.0) (4.4) (2.8) (8.6) (3.3) (4.5) Telephone and postage Insurance Motor vehicle expenses Depreciation – delivery van - fixtures and fittings Operating profit 35.5 56.3 Loan interest (5.4) (4.6) Profit for the year 30.9 50.9

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The performance of the business for the year to December 31 2014 is shown as follows 1 Sales revenue ...View the full answer


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Inshal Shakeel
I have passed my Secondary School from Sadhana Devi Vidyapith, Samastipur -848101 And I'm pursuing my Btech from Dr. B C Roy Engineering College - Durgapur. Currently, I'm working at Chegg India as SME in Chemistry
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Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.

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