Zak has depreciated his machinery at the rate of 20% per annum using the straight-line method.
At 31 December 2018 the statement of financial position included:
$
machinery at cost 30 000
depreciation to date 12000
18000
On 31 December 2019 Zak was considering calculating the annual depreciation at 20% per annum on the net book value of the machinery.
Which statement is correct?

Q: What topic does this question test?

This question tests Accounting principles and policies in O-Level Accounting (syllabus code 7707). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge O-Level Accounting Oct/Nov 2020 examination, Paper 1 Variant 3 (7707_w20_qp_13.pdf).

Question

Zak has depreciated his machinery at the rate of 20% per annum using the straight-line method.
At 31 December 2018 the statement of financial position included:
$
machinery at cost 30 000
depreciation to date 12000
18000
On 31 December 2019 Zak was considering calculating the annual depreciation at 20% per annum on the net book value of the machinery.
Which statement is correct?

Oracle Prep · Accepted Answer

The correct answer is C: depreciation would be $6000 applying the consistency principle.

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