Smart Sports purchased a computer for £3,500. Kim advises Sam to depreciate it on the reducing-balance basis at the rate of 40% per annum.

a) Complete the working in Table 4.4 to find the depreciation charge for each of the first three years:

In summary, the annual depreciation charged to the income statement for the computer is shown in Table 4.5:

b) Show the statement of financial position entries for the computer, using Table 4.6.

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Table 4.4 Cost of the computer 1st year's depreciation charge (40% 3,500) Net book value at 31 December 2011 2nd year's depreciation charge (40% 2,100) Net book value at 31 December 2012 3rd year's depreciation charge (40% 1,260) Net book value at 31 December 2013 3,500 1,400 2,100