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 is the carrying value of Jackie's fixed assets and how much is in the bank account at the end of the year?
A) £107000 and £73000
B) £98000 and £73000
C) £97000 and - £107000
D) £94000 and £73000
E) £95000 and £73000

Question

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 is the carrying value of Jackie's fixed assets and how much is in the bank account at the end of the year?
A) £107000 and £73000
B) £98000 and £73000
C) £97000 and - £107000
D) £94000 and £73000
E) £95000 and £73000

Quizplus · Accepted Answer

- Carrying value of fixed assets:

- Lease: no depreciation is needed, so the carrying value remains at £80000. 
- Fixtures and fittings: £12000/4 = £3000 depreciation per year, so after one year the carrying value is £12000 - £3000 = £9000. 
- Car: £15000/3 = £5000 depreciation per year, so after one year the carrying value is £15000 - £5000 = £10000.

Total carrying value of fixed assets = £80000 + £9000 + £10000 = £98000.

- Bank account balance:

- Jackie put £180000 in the account and made no withdrawals, so the balance at the end of the year is still £180000.

Therefore, the correct answer is B.

Jackie Had the Following Transactions in the Year