A company bought a machine for use in his business on 1 January 2010. He gave the supplier a cheque for $11 750 and traded in an old machine. The supplier allowed him $4430 in part exchange for the old machine. The company depreciates machinery on the reducing basis at a rate of 20% per annum. The old machine had cost $12 000 and had accumulated depreciation of $5856.

What is the depreciation charge on the new machine for the year ended 31 October 2010?

a. $886

b. $2350

c. $4465

d. $3578 ACCA adaptedLO1.