AFE 5008-B (Financial Accounting) -Week 3 Activities

Question 1:

Karen has been running a successful nursery school ‘Little Monkeys’ since 20X1. She bought the
following assets as the nursery grew:

 A new oven for the nursery kitchen at a cost of £2,000(Purchased 1 December 20X4).
 A minibus to take the children on trips for £18,000 (purchased 1 June 20X4).

She depreciates the oven at 10% straight line and the minibus at 25% reducing balance. A full year’s
depreciation is charged in the year of purchase and none in the year of disposal.

What is the total depreciation charge for the year ended 31 October 20X6?

A £2,531
B £2,700
C £4,231
D £ 2,731

Question 2:
Santa runs a large toy shop in Windsor. In the year ended 31 August 20X5, she bought the following
non-current assets:
 A new cash register for £5,000. This was purchased on 1 December 20X4, in time for the
Christmas rush, and was to be depreciated at 10% straight line.
 A new delivery van, purchased on 31 March 20X5, at a cost of £22,000. The van is to be
depreciated at %15 reducing balance.

Santa charges depreciation on a monthly basis.

 What is the depreciation charge for the year ended 31st August 20X5?
 Show the relevant ledger accounts and statement of financial position presentation at that
date.