The plant and machinery account (at cost) of a business for the year ended 31 December 2014 is as follows: \begin{array}{|l|c|} \hline & \(\mathrm{N}^{\cdot 000}\) \\ \hline 3 Jan. balance & \(2.400\) \\ \hline & \(1.600\) \\ \hline 31 March-disposal & \(4.000\) \\ \hline Balance & \((600)\) \\ \hline \end{array} The company's policy is to charge depreciation at \(20 \%\) per year on the straight line basis. with proportionate depreciation in the years of purchase and disposal. What should be the depreciation charge for the year ended 3 Ist December 2014?
A. \(\mathrm{N} 680,000\) B. N 640,00 C. \(\mathbf{N} 10,000\) D. N 550,000
Correct Answer: C
Explanation
Dep. on asset as at I Jan \(\ 2.400 .000,20 \%=\beta 3480.000\)ep on asset as at 30 June \(\# 1.600 .000,20 \% \times \frac{6}{12}=\frac{\# 160.000}{\# 640.000}\)ep on asset disprosed at 31 March \(\# 600.000,20 \%, \frac{3}{12}=\frac{\# 30.000}{\# 610.000}\)
