Smart Sports purchased a printing machine for £5,500, and having done some research, Sam estimates that it should have a useful life of four years, at the end of which time it is likely to have no residual value. If the straight-line depreciation method is going to be used:

a) What rate, given as percentage, should depreciation be charged at, if the machinery is to be written off over four years?

b) What will be the annual depreciation charge?

c) Knowing that the NBV of the machinery is the cost less the accumulated depreciation charged on it, calculate the NBV of the machinery at 31 December 2011 and at subsequent year ends, using Table 4.3.

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Table 4.3 At the first accounting year-end, 31 December 2011 Printing machine Cost Accumulated depreciation 5,500 At the second accounting year-end, 31 December 2012 Printing machine Cost Accumulated depreciation 5,500 At the third accounting year-end, 31 December 2013 Printing machine Cost Accumulated depreciation 5,500 Net book value Net book value Net book value At the fourth accounting year-end, 31 December 2014 Cost Net book value Accumulated depreciation Printing machine 5,500