Y Limited purchased a motor van with these costs: Purchase price 50,000; Delivery 4,500; Engine upgrade 6,000; 2-year maintenance contract 4,000; Annual licence fee 1,200. Depreciation: 20% straight-line. What are the total expenses in the statement of profit or loss?

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SSC Financial and Cost Accounting P-1 QUESTION #6132

Question 1

Y Limited purchased a motor van with these costs: Purchase price $50,000; Delivery $4,500; Engine upgrade $6,000; 2-year maintenance contract $4,000; Annual licence fee $1,200. Depreciation: 20% straight-line. What are the total expenses in the statement of profit or loss?

$14,340
$15,300✔️
$17,300
$20,100

Correct Answer Explanation

Option B ($15,300) is correct.

Capital expenditure: $50,000 + $4,500 + $6,000 = $60,500

Depreciation = $60,500 × 20% = $12,100

Revenue expenditure: Maintenance (year 1 only) $4,000 ÷ 2 = $2,000 + Licence $1,200 = $3,200

Total expenses = $12,100 + $3,200 = $15,300

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