The Property Co Ltd have recently purchased a building at a cost of £3,500,000. They have estimated that this will have a useful life of 20 years and a residual value of £900,000. They have not yet decided whether to depreciate this using the straight line method or the reducing balance method at 6% per annum. The Property Co Ltd have a policy of charging a full year's depreciation in the year of purchase and none in the year of sale. What would be the value of the depreciation for the first TWO years under the straight line method? £260000 What would be the value of the depreciation for the first TWO years under the reducing balance method? £ (Enter the values with no £ sign, comma or decimal places)
The Property Co Ltd have recently purchased a building at a cost of £3,500,000. They have estimated that this will have a useful life of 20 years and a residual value of £900,000. They have not yet decided whether to depreciate this using the straight line method or the reducing balance method at 6% per annum. The Property Co Ltd have a policy of charging a full year's depreciation in the year of purchase and none in the year of sale. What would be the value of the depreciation for the first TWO years under the straight line method? £260000 What would be the value of the depreciation for the first TWO years under the reducing balance method? £ (Enter the values with no £ sign, comma or decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Property Co Ltd have recently purchased a building at a cost of £3,500,000. They have estimated that this will have a useful life of 20 years and a residual
value of £900,000. They have not yet decided whether to depreciate this using the straight line method or the reducing balance method at 6% per annum.
The Property Co Ltd have a policy of charging a full year's depreciation in the year of purchase and none in the year of sale.
What would be the value of the depreciation for the first TWO years under the straight line method? £260000
What would be the value of the depreciation for the first TWO years under the reducing balance method? £
(Enter the values with no £ sign, comma or decimal places)
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