Adam's financial year ends on 31 December. At the beginning of the year, on 1 January, the carrying value of machinery was $20000. During the year, on 30 June, he purchased a new machine for $6000. He paid 50% of the cost in cash and the balance by part exchange of an old machine which had the carrying value of $2500 on that date. He depreciates his machinery by 20% per annum on the carrying value calculated on a time basis. What is the carrying value of the machinery shown in the statement of financial position at the end of the year on 31 December?

Why does a business charge depreciation on its non-current assets?

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Which item is an example of capital expenditure?

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