Robin's business had total assets at the start of the year amounting to £140000 of which £80000 related to current assets. Robin disposed of a fixed asset which had been purchased for £30000 and on which £16000 depreciation had been charged for £15000 and bought a replacement asset for £26000. He charged £11000 depreciation on his assets in the year. What is the fixed asset carrying amount at the end of the year?
A) £45000
B) £61000
C) £136000
D) £56000
E) £72000

Question

Quizplus · Accepted Answer

Fixed asset carrying amount at the start of the year = Purchase price - Depreciation charged = £30000 - £16000 = £14000

Total assets at the start of the year = Fixed asset carrying amount + Current assets = £140000
Current assets = £80000

Therefore, Fixed asset carrying amount at the start of the year = Total assets - Current assets
Fixed asset carrying amount at the start of the year = £140000 - £80000 = £60000

Robin disposed of the fixed asset for £15000, which was less than the carrying amount of £14000, resulting in a loss of £1000. He also purchased a new asset for £26000.

Depreciation charged during the year was £11000.
Fixed asset carrying amount at the end of the year = Fixed asset carrying amount at the start of the year - Depreciation charged + Loss on disposal + Cost of the new asset
Fixed asset carrying amount at the end of the year = £60000 - £11000 - £1000 + £26000
Fixed asset carrying amount at the end of the year = £61000

Therefore, the fixed asset carrying amount at the end of the year is £61000, which is option B.

Robin's Business Had Total Assets at the Start of the Year