a business purchases machinery at a cost of pound 30 000 it is expected to have a li 611261

A business purchases machinery at a cost of £30,000. It is expected to have a life of six years, after which it will have no residual value. It is to be depreciated using the straight-line method. The annual depreciation for the machinery will be £5,000. This would appear as a charge in the income statement for each of the six years. The relevant section of the balance sheet showing machinery would appear at the end of each year as follows:

Balance sheet

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Year

Year

Year

Year

Year

Year

extract at year-end date

1

2

3

4

5

6

Non-current assets

£

£

£

£

£

£

Machinery at cost

30,000

30,000

30,000

30,000

30,000

30,000

Less depreciation

5,000

10,000

15,000

20,000

25,000

30,000

Net book value/carrying amount

25,000

20,000

15,000

10,000

5,000

0

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