A-LevelAccountingAccounting for non-current assets9706/12 · May/June 2022 · Q21 Mark
A sole trader has changed the method of depreciating his machinery from the reducing balance method in the year 1 to the straight-line method in the year 2 of trading. The same percentage rate of depreciation is used in both cases. What is the effect on the net book value of machinery and profit for the year 2?
Anet book value: higher, profit for the year 2: higher
Bnet book value: higher, profit for the year 2: lower
Cnet book value: lower, profit for the year 2: higher
Dnet book value: lower, profit for the year 2: lower
✓ Correct answer
D: net book value: lower, profit for the year 2: lower
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