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Q. Mark acquired a new computer on1 oct 04 for $57500 including recoverable sales tax at 15%.he depreciates all computers straight line at 20% per annum on a monthly basis.
what is carrying amount of the computer at 31 dec 04?
a $46000
b $54625
c $46431
d $47500iam trying for this for last 2 days but not getting my exams are near plz help me out.
Hi @uzma
May it be answer b: $54,625?
Initial amount $57,500. Monthly depreciation for 3 month: 57,500 * 20% * 3/12 = $2,875
Carrying amount 57,500 – 2,875 = $54,625.Answer is d = 47,500 as follows
1. Since the sales tax is recoverable, it is not a part of the cost recognised. Cost = 57,500*100/115 (to find the element of cost) = 50,000
2. Depreciation for 3 months = 50,000*20%*3/12 = 2,500
3. Net book value = carrying amount = 50,000 – 2,500 = 47,500
If the tax was irrecoverable, then the computation by Sangria9 would be correct.
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