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Straight Line Depreciation Please Help

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  • 5 posts
  • # 113384

I am in need of some help.

I am running through some practice questions I got from an OCR A Level in Accouting PDF via the internet (really good resource on top of the Kaplan books if you are self studying like me).

Straight line depreciation when not all of the information is provided to you (ie no residual value or life expectancy) is melting my brain. Can someone please help me understand how they reached the following answer with the information given:

Buildings are depreciated at a rate of 4% per annum on the balance in the buildings account at the end of the year.

Balance as at 01.04.16:

Buildings £150,000 
Depreciation of buildings £90,000

What is the depreciation amount for the year ending 31.03.07?

The answer is £6800 but for love nor money I cannot reach the same answer.

If somebody would be kind enough to help I would really appreciate it.



Edited at 14 Jul 2016 01:16 PM GMT

  • Accredited Training Provider
  • 413 posts
  • # 113385

Hi, was there any adjustments required that could have increased your value of property by £20k?

  • Affiliate
  • 5 posts
  • # 113386

Hi Brian,

Thanks for replying to me. Now that you have said that, I have looked again and there was an extension to the building @ £20k. I added that to the £150k and took off 4% for depreciation it has got me to the £6800 that they gave as the answer. Silly to have overlooked such a simple thing. Thank you for your input it has helped me see the error I was making.

Smile

  • Accredited Training Provider
  • 413 posts
  • # 113387

Glad it helped. Good luck with your study Laughing

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