The following information relates to the machines of Crosby Packing.
1 January 2014 Purchased Machine A for $12 000
30 September 2015 Purchased Machine B for $16 000
30 June 2016 Disposed of Machine A and received a cheque for $7500.
Crosby Packing's depreciation policy is as follows:
(i) Machines are depreciated at the rate of 20% per annum using the straight-line method.
(ii) Depreciation charge in the year of purchase or sale is based on months of ownership.
REQUIRED

Q: What topic does this question test?

This question tests Accounting procedures in O-Level Accounting (syllabus code 7707). It is worth 20 marks.

Q: Which exam paper is this question from?

This question appeared in the Cambridge O-Level Accounting Oct/Nov 2017 examination, Paper 2 Variant 1 (7707_w17_qp_21.pdf).

Question

The following information relates to the machines of Crosby Packing.
1 January 2014 Purchased Machine A for $12 000
30 September 2015 Purchased Machine B for $16 000
30 June 2016 Disposed of Machine A and received a cheque for $7500.
Crosby Packing's depreciation policy is as follows:
(i) Machines are depreciated at the rate of 20% per annum using the straight-line method.
(ii) Depreciation charge in the year of purchase or sale is based on months of ownership.
REQUIRED

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