Answered: Identify the depreciation amount that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ltd buys a machine on 1 June 19.1 the cost price of which is R1 000 000. A Ltd provides for depreciation on machinery at 20% per annum according to the straight-line method. The SA Revenue Service allows a wear-and-tear allowance of 25% per annum according to the straight-line method. The year-end of A Ltd is 31 May. Assume a taxation rate of 40%. Assume that A Ltd maintains a profit before provision for depreciation of R500 000 each year.

Identify the depreciation amount that would be deducted to arrive at the profit for year for accounting purposes at 31 May 19.2.

Select one:

a. R20 000

b. R200 000

c. R50 000

d. R250 000

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