Shakil buys a new computer system for his business on 1 July 2019 at a cost of £30,000. He decides to depreciate the new computer system at a rate of 30% reducing balance. He estimates that the new computer system will have a residual value of £5,000 at the end of its useful life. What will the carrying amount of the new computer system be at 30 June 2022?

Question

Quizplus · Accepted Answer

The carrying amount is calculated using the reducing balance method: Year 1: £30,000 x 70% = £21,000; Year 2: £21,000 x 70% = £14,700; Year 3: £14,700 x 70% = £10,290.

Shakil Buys a New Computer System for His Business on 1