ITPEC FE Morning October 2022 Question 78
ITPEC FE Morning October 2022 — Question 78 of 80
Annual depreciation = (Cost − Salvage value) ÷ Useful life
= (126,000 − 6,000) ÷ 6 = 120,000 ÷ 6 = 20,000
Why not others:
- (a) 12,000 — divides by wrong number (126,000 ÷ 6 = 21,000, not 12,000; no logical basis)
- (c) 21,000 — forgets to subtract salvage value (126,000 ÷ 6 = 21,000)
- (d) 36,000 — divides only salvage-adjusted amount by 2 instead of 6, or other miscalculation
Key rule: Always subtract salvage value before dividing — straight-line spreads only the depreciable amount evenly.
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