All Saints Plc Acquired a Machine for £50 000 on 1

question 58

Multiple Choice

All Saints Plc acquired a machine for £50 000 on 1 January.This asset has useful life of 4 years and a residual value of £10 000.The declining balance rate adopted by the entity for similar machines is 40%.What is the depreciation expense for the first year,if the depreciation policy adopted is straight-line,declining-balance or sum-of-digits method,respectively?

• A)£10 000; £20 000; £16 000
• B)£10 000; £25 000; £20 000
• C)£12 500; £20 000; £16 000
• D)£12 500; £25 000; £20 000

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Definitions:

First-In, First-Out Methods

An inventory valuation method where the first items produced or purchased are the first ones sold, affecting the cost of goods sold and inventory valuation.

First-In, First-Out Method

An inventory valuation method where the first items placed into inventory are the first ones sold.

Weighted-Average Method

An inventory costing method that calculates the cost of inventory based on the average cost of all similar items in the inventory, considering their weight.

Process Costing System

An accounting system used for homogenous products, where costs are accumulated and then assigned to units of output on an average basis.