ACCA F3 Mock Exam Net Profit
A company’s income statement for the year ended 31 December 2005 showed a net profit of $70,000. It was later
found that $40,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the
company’s policy to depreciate motor vans at 25 per cent per year on the straight line basis, with a full year’s charge
in the year of acquisition.
What would the net profit be after adjusting for this error?
ACCA F3 Mock Exam Net Profit
Suggested Solution : $100,000
Working:
Net profit + Motor expenses - Annual Depreciation
70,000 + 40,000 - 40,000 X 0.25
= 100,000.