Jackie had the following transactions in the year. Put £180000 of her own money into the business bank account. Took out a 40 year lease on the premises at a cost of £80000, bought fixtures and fittings or £12000 which she thinks will last four years and then be worth nothing and a car for £15000 which she will use for three years and then sell or an estimated £3000. All assets are to be depreciated or amortised over their useful lives using straight line depreciation. What should the charge to the income statement be in total?
A) £10000
B) £8000
C) £9000
D) £7000

Question

Quizplus · Accepted Answer

- Annual depreciation of fixtures and fittings = £12000 / 4 years = £3000
- Annual depreciation of car = (£15000 - £3000) / 3 years = £5000
- Total annual depreciation = £3000 + £5000 = £8000

Therefore, the charge to the income statement in total should be £8000. Choice C is the only option that matches this answer.

Jackie Had the Following Transactions in the Year