ACCA FA2 NET BOOK VALUE
Alan purchased a machine on 1 March 20X1 for $80,000. He incurred additional costs for transportation of $500 and installation of $7,000 . shortly after he started to use the machine, it broke down and the repair of the machine cost $4,000.
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 | 80,000 |
| Transportation cost | 500 |
| Installation cost | 7,000 |
| Total cost | 87,500 |
| 10% depreciation | 8,750 |
| Net Book Value | 78,750 |
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