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Dear sir,
ABC purchased a car for £10000.roadtax=£150.my question is when calculating depreciation in reducing balance method should we consider 150 +10000 in the equation? If not why?In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
Only the cost of $10,000 is capital expenditure, and will appear on the SOFP and be depreciated.
The road tax is revenue expenditure, and will appear as an expense in the SOPL – it is a running cost that will be payable every year.
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