Suppose a Company Purchases a Van for £21,000 with the Intention

question 21

Multiple Choice

Suppose a company purchases a van for £21,000 with the intention of using it for three years and selling it for £6,000 at the end of the three years.The company uses straight line depreciation.Which of the following statements is correct?

• A) The annual depreciation charge is £7,000
• B) The annual depreciation charge is £21,000
• C) The annual depreciation charge is £5,000
• D) The annual depreciation charge is £15,000

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Definitions:

Alternatives

Different choices or options that are available in a decision-making process.

Adjusted Corporate Tax

This term might involve adjustments made to the corporate tax reported, accounting for various deductions, credits, and exemptions to reach a tax obligation more accurately reflecting the company's financial activity.

Taxable Income

Income subject to taxes, calculated by subtracting deductions and exemptions from gross income.

Total Operating Capital

Represents the total amount of capital tied up in operating assets, necessary for the day-to-day functioning of a business.