ITPEC FE Subject A April 2025 Question 60
Source exam: ITPEC FE Subject A April 2025Topic: Corporate & Legal
ITPEC FE Subject A April 2025 — Question 60 of 60
Annual depreciation = (Cost − Salvage value) ÷ Useful life
= (126,000 − 6,000) ÷ 6 = 120,000 ÷ 6 = $20,000
Why not others:
- (a) 12,000 — divides only salvage value by years, ignores cost
- (c) 21,000 — divides full cost by 6 (126,000 ÷ 6), ignores salvage value
- (d) 36,000 — divides full cost by wrong number of years (≈ 3.5 years)
Key rule: Always subtract salvage value before dividing: (cost − salvage) ÷ years.
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