Nguyen Trading Co. owns a delivery vehicle with a book value of $24,000 at the start of the year. The company uses the reducing balance method at 25% per annum. What is the depreciation charge for the year?

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Question

Nguyen Trading Co. owns a delivery vehicle with a book value of $24,000 at the start of the year. The company uses the reducing balance method at 25% per annum. What is the depreciation charge for the year?

Accepted Answer

$6,000 — Award 1 mark for correct calculation: $24,000 × 25% = $6,000. A is incorrect — this incorrectly applies 20% rate. C is incorrect — this confuses reducing balance with a different calculation. D is incorrect — arithmetic error.

Answer

$8,000

Answer

$4,800

Answer

$5,000

Answer

$6,000

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