Hebe's business bought a non-current asset for £18 000 on 1 January 20X1.The decision was made to apply straight-line depreciation over ten years, with an assumption of nil residual value at the end of the ten-year period.Three years later, on 1 January 20X4, Hebe sells the asset for £13 000. What is the total cash effect of the transactions on Hebe's accounts over the three-year period from 1 January 20X1 to 1 January 20X4?
A)Net cash outflow of £5000
B)Net cash outflow of £10 400
C)Net cash outflow of £400
D)Net cash inflow of £5000

Question

Quizplus · Accepted Answer

The asset was purchased for £18,000 and sold for £13,000, resulting in a net cash outflow of £5,000 (£18,000 - £13,000) over the three-year period.

Hebe's Business Bought a Non-Current Asset for £18 000 on 1