Wetherby Plc purchased a machine on 1 July 2022 for £500,000. It is being depreciated on a straight-line basis over its useful life of ten years. Residual value is estimated at £20,000. On 1 January 2023 following change in legislation Wetherby Co fitted a safety guard to the machine. The safety guard cost £25,000 and has a useful life of five years with no residual value. Required: What amount will be charged to profit or loss for the year ended 31 March 2023 in respect of depreciation on this machine? ( Calculate your answer to the nearest whole £)

Wetherby Plc purchased a machine on 1 July 2022 for £500,000. It is being depreciated on a straight-line basis over its useful life of ten years. Residual value is estimated at £20,000. On 1 January 2023 following change in legislation Wetherby Co fitted a safety guard to the machine. The safety guard cost £25,000 and has a useful life of five years with no residual value. Required: What amount will be charged to profit or loss for the year ended 31 March 2023 in respect of depreciation on this machine? ( Calculate your answer to the nearest whole £)

Name: Wetherby Plc purchased a machine on 1 July 2022 for £500,000. It is b
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Description: Wetherby Plc purchased a machine on 1 July 2022 for £500,000. It is being depreciated on a straight-line basis over its useful life of ten years. Residual value is estimatedat £20,000. On 1 January 2023 following change in legislation Wetherby Co fi

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Wetherby Plc purchased a machine on 1 July 2022 for £500,000. It is being depreciated on a straight-line basis over its useful life of ten years. Residual value is estimated
at £20,000. On 1 January 2023 following change in legislation Wetherby Co fitted a safety guard to the machine. The safety guard cost £25,000 and has a useful life of five
years with no residual value. Required: What amount will be charged to profit or loss for the year ended 31 March 2023 in respect of depreciation on this machine? (
Calculate your answer to the nearest whole £)

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