ACCA FA2 NET BOOK VALUE
Alan purchased a machine on 1 March 20X1 for $70,000. He incurred additional costs for transportation of $4,000 and installation of $1,000 . shortly after he started to use the machine, it broke down and the repair of the machine cost $3,000.
Alan charges depreciation at 10% per annum on straight line basis with a full year's charge in the year of acquistion.
What is the correct net book value of the machine at the year end date of 31 December 20X1?
Suggested Solution.
| $ | |
| Cost of machine | 70,000 |
| Transportation cost | 4,000 |
| Installation cost | 1,000 |
| Total cost | 75,000 |
| 10% depreciation | 7,500 |
| Net Book Value | 67,500 |
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