Mrs Hall is a trainee accountant at a business. She has been approached by a colleague to see if they can purchase a new office chair - retailing at £160. Mrs Hall advises her colleague to speak to her line manager for approval. It is the 24 of February and the accounting year runs 1 February to 31 January each year. For fixtures and fittings the business uses a straight line depreciation method over 3 years, with no residual value. Its capital expenditure policy requires any expenditure with a useful life of over 1 year AND at a cost of over £200 be capitalised. Assuming the chair is purchased that month what will be the charge in the Statement of Profit or Loss in the year of purchase assuming the business recognises a full year's worth of depreciation in the year of purchase?

Mrs Hall is a trainee accountant at a business. She has been approached by a colleague to see if they can purchase a new office chair - retailing at £160. Mrs Hall advises her colleague to speak to her line manager for approval. It is the 24 of February and the accounting year runs 1 February to 31 January each year. For fixtures and fittings the business uses a straight line depreciation method over 3 years, with no residual value. Its capital expenditure policy requires any expenditure with a useful life of over 1 year AND at a cost of over £200 be capitalised. Assuming the chair is purchased that month what will be the charge in the Statement of Profit or Loss in the year of purchase assuming the business recognises a full year's worth of depreciation in the year of purchase?

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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