Accounting Online Program Certification Practice Test

To determine the carrying amount of Redruth plc's plant and equipment as of 31 March 20X6, it is important to consider the principles of accounting related to asset valuation. The carrying amount of an asset is calculated as the original cost of the asset minus any accumulated depreciation and impairment losses.

In this scenario, if the option indicating a carrying amount of £257,835 was chosen as the correct answer, it suggests that this figure results from systematically subtracting the relevant accumulated depreciation from the initial cost of the plant and equipment. This indicates a thorough understanding of how to adjust the asset’s value over time to reflect its usage and wear.

Taking into account the nature of long-term assets like plant and equipment, depreciation methods (such as straight-line or declining balance) would have been applied to reach that specific carrying amount. The choice reflects an accurate application of accounting principles to calculate the asset’s true value on the balance sheet as of the specified date.

Understanding the appropriateness of depreciation in relation to asset longevity and usage is crucial in accounting, and this choice illustrates that grasp. Consequently, the calculations and deductions leading to the selected carrying amount align with standard accounting practices, ensuring that financial statements provide a true and fair view of the company’s