A-LevelAccountingAccounting for non-current assets9706/12 · May/June 2022 · Q31 Mark
Paul has a year end of 31 December. On 1 January 2020, he bought a non-current asset for $10000. He sold it on 1 January 2021 for $8500. Paul usually provides depreciation at the rate of 10% per annum. A full year's depreciation is charged in the year of acquisition and none in the year of disposal. He forgot to provide for any depreciation on this non-current asset. What was the effect of this error on Paul's profit for the year ended 31 December 2021?
A$1000 higher
B$1000 lower
C$1500 higher
D$1500 lower
✓ Correct answer
B: $1000 lower
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