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 |
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 |