1. avatar says

    when we calculate the new depreciation per year after the revaluation , shall we consider the residual value of the assets?? we just use the remaining years divide the new value or something??

  2. Profile photo of waseem says

    Hey john,
    Could you solve following question for me. Banjo Co purchased a building on 30 June 20X8 for $1,250,000. At acquisition, the useful life of the building was 50 years. Depreciation is calculated on the straight-line basis. 10 years later, on 30 June 20Y8 when the carrying amount of the building was $1,000,000, the building was revalued to $1,600,000. Banjo Co has a policy of transferring the excess depreciation on revaluation from the revaluation surplus to retained earnings.
    Assuming no further revaluations take place, what is the balance on the revaluation surplus at 30 June 20Y9?
    A $335,000 B $310,000 C $560,000 D $585,000

    • Profile photo of John Moffat says

      In future, please ask questions like this in the Ask the Tutor Forum (and not as a comment on a lecture).

      The depreciation on the original cost was $25,000 a year.

      On revaluation, there is a revaluation surplus of 600,000 (1,600,000 – 1,000,000).

      There are 50 years left for the building, and so the new depreciation will be 1,600,000 / 40 = $40,000 a year. The is what is charged in the Statement of profit or loss.

      However the excess over the original depreciation of 15,000 (40,000 – 25,000) is transferred from revaluation surplus to retained earnings. So the balance left on revaluation surplus is 600,000 – 15,000 = $585,000

  3. Profile photo of Rustam says

    Sir, a tiny misleading. always i did like Kelechi did, without T accounts. like what it should be and what it is. so difference is loss/gain. but in the last working, Revaluation account is an asset account? (not like “Revalutaion surplus” is capital account (Credit acc).
    Because when we’re debiting with rev’n surplus (528K) we should also debit this account with acc.dep’n…this is then nonsense… it concludes that it is just new building account (asset acc.).:)

    • Profile photo of John Moffat says

      It is not an asset account – I really do not know what you are trying to say.
      Why on earth should we debit it with the accumulated depreciation? We debit accumulate depreciation to remove it, and credit the revaluation account. The revaluation account is being use to calculate the gain on revaluation.
      (And there is never going to be a loss – in F3 we only will revalue upwards.)

  4. avatar says

    Hello, for this example 5, you say that we have a gain or profit on revaluation of 588,000. Could you explain how else I could know whether we would have a loss or a gain by merely looking at the question (or intuition) even if I would not know the exact figure of profit or loss.

  5. avatar says

    Hi. I have a little bit of confusion on this statement from the lecture notes and would like further clarifications: “…and then excess of the new charge over the old charge should be transferred from the revaluation reserve to accumulated profits.”
    Many thanks

    • Profile photo of John Moffat says

      We calculate the depreciation on the revalued amount, and this is charged as an expense in the Statement of profit or loss.

      We then calculate what the depreciation would have been if there had not been a revaluation. The difference between the two figures is then transferred – Dr Revaluation reserve; Cr Retained earnings (accumulated profits).

      • avatar says

        Ok, thanks for clarifying. Would this be done only in the year of revaluation and then no more? Thanks

  6. avatar says

    I need help in this question.

    A business purchased an asset on 1 Jan 20X1 at a cost of $160,000. The asset had an expected life of 8years and a residual value of $40,000. Straight line method is used to measure depreciation. The financial year ends on 31 Dec.

    At 31 Dec 20X3 the estimated remaining life of the asset from that date is now expected to be only 3 more years, but the residual value remains unchanged.

    What will be the net book value of the asset as at 31 December 20X3, for inclusion in the statement of financial position?

  7. Profile photo of minhalgulamhussein says

    hello sir. Sir, i am stuck in one question of depreciation. Below is the question;

    A firm bought a car for $10,000 on 1 January 200, which had an expected useful life of 4 years and expected residual value of $2,000.
    Th e firms policy is to charge depreciation in the year of disposal.
    On 31 December 2011, the car was sold for for $3,200.

    What amount would appear in the statement of profit or loss for the year ended 31 December 2011, for the loss on disposal?

    • Profile photo of John Moffat says

      In future you must ask questions like this in the Ask the Tutor Forum – not as a comment on a lecture.

      The depreciation is (10000-2000)/4 = 2,000 per year.
      You have not typed what year it was bought in and so I cannot answer in full. There will be depreciation for each year (including 2011). The profit or loss on disposal will be the difference between the sale proceeds of 3,200 and the book value at 31.12.2011

  8. avatar says

    Hello sir.Can you please help me,I didn’t understand something.
    Isn’t depreciation calculated on the original price?And here we calculated it on the $3,600,000.But isn’t this the depreciated price?
    Also,in the building a/c also we valued the building at the depreciated value of $3,600,000.Shouldn’t it have been at the original price?

    • Profile photo of John Moffat says

      The question says that the cost was 3,600,000. Therefore this was the original cost.
      And yes – since the depreciation is straight line, it is calculated on the original cost of 3,600,000 (until, of course, the revaluation).

      (I assume that you have printed out the free Lecture Notes that are used in the lectures? Otherwise there is no point in watching the lectures.)

    • Profile photo of John Moffat says

      There are two ways of getting the same answer. One way is the way it is done in the answers at the end of the Lecture Notes, but maybe you will be happier with this way:

      From 1 Jan up to 13 March (3 months) the cost is 240,000. So the depreciation for this period is 3/12 x 20% x 240,000.
      On 31 March they sell some, so from 1 April to 30 June (3 months) the cost is 180,000. So the depreciation for this period is 3/12 x 20% x 180,000.
      On 30 June they buy more, so the cost becomes 340,000 and stays at this from 1 July to 31 December (6 months). So the depreciation for this period is 6/12 x 20% x 340,000.

      Add up the three workings and the total comes to 55,000 (as per the answer at the back)

      (In future, it is better if you ask specific questions like this in the F3 Ask the Tutor Forum, then I am certain to see it :-) )

  9. avatar says

    Stuck again here… Question 4 on the test.

    70K – 7K = 63K depreciation charge 9K p.a.

    Charge for 2000. and 2001 = 18k

    NBV at start of of 2002 = 52k

    we change useful life – 52k – 7k – 45k / 3 = 15k

    Accumulated depreciation should = (2000: 9K, 2001: 9K, 2002: 15K) = 33K?

    My answer is not correct, so I want to understand what exactly I have done wrong? thanks!

  10. avatar says

    Hi, i’m stuck on Ex.5, when you calculated the second depreciation for the last 6 months. Why was it not calculated simply as: 2% * 3’0720’000 * (6/12).
    Many thanks.

    • Profile photo of John Moffat says

      2% straight line is equivalent to spreading the cost over a useful life of 50 years (100% / 2%).

      Before the revaluation, the depreciation was 2% x 3,600,000 = 72,000 per year, and since the accumulated depreciation was 1,080,000, it means that we must have been using the asset for 1080000/72000 = 15 years as at 31 December 2002. So at the date of the revaluation we had used it for 15.5 years.

      Since the useful like originally was 50 years, and the question says there is no change in the remaining life, it means that 50 – 15.5 = 34.5 years remain.

      So we must depreciation in future over 34.5 years which is 3072000 / 34.5 = 89,043 over year. (Only 6/12 for the year in which we revalue because it occurred 6 months through the year)

  11. avatar says


    Could you please walk us thru the Test Question # 4?

    To me, they made a loss but loss is not an option in the MCs.

    This is my working.

    Depreciation expense p.a:($70,000-$7,000)/7yrs = $9,000 p.a.

    At the end of yr 2, the worth of the machine is $70,000-$18,000 = $52,000

    Two years later the useful life was revised to 3 remaining years, and at 31 Dec the machine was sold for $30,000 (at the end of yr3)

    ($52,000-$7,000)/3 = $15,000

    Machine worth by the end of yr3 = $52,000-$15,000 = $37,000

    PnL of Sale = $37,000-$30,000 = $7,000 loss.

    • avatar says

      At the beginning of 2002 the machine’s value is 52,000.
      You have to depreciate 15k for 2002 and 2003 which would give you 52k – 30k = 22,000 remaining on the asset value.

      30k – 22k = 8k profit

  12. avatar says

    Hello there,

    I’m confused regarding Example 5. The original cost of building was $3,600,000. and the revaluated amount was $3,072,000. Isn’t that a LOSS of $528K? Since the value of the building dropped.

    Thanks in adv.

  13. Profile photo of Bakhtawer says

    Dear Mr Moffat

    i’m sorry for bugging you but I have my exam on the 13th and I self studied so I have issues.
    Can you just sum me down the entries for dividends.
    In your notes it says all dividends paid go in statement of changes in equity but what about those dividends which are declared during the year but NOT paid by th year end.We will show them in the statement of financial position but will we show them in the statement of changes in equity as well?

    Please reply :)

    • Profile photo of John Moffat says

      In future, please do not ask a question about dividends under a lecture on depreciation. Ask in the F3 Ask the Tutor forum. Here is to make comments regarding the lecture.

      If a dividend has been declared, then it means that it is certain (it has been voted on). So it will appear in the Statement of changes in equity. If it has not yet been paid, then it will also appear in the SOFP as a current liabaility.

      If a dividend has only been proposed, then it has not been voted on and is not certain. Therefore it will appear nowhere.

    • Profile photo of John Moffat says

      No – that would not give the estimated useful life!

      (Suppose I have an asset which cost $10,000 and I am depreciating straight line over 10 years. The annual deprecation is $1000. If I have owned if for 6 years then the accumulated depreciation if $6000. $6000/$1000 is not giving me the estimated useful life!
      What it does tell me is how many years that I have owned it (assuming obviously that I am using straight line depreciation).

    • Profile photo of John Moffat says

      Certainly! It is very common (especially with cars) to trade in the old one for the new one.

      The entries for removing the old asset are the same as for any sale.

      The cash paid for the new one is Cr Cash Dr Asset account.
      The trade-in value is Dr Disposal account; Dr Asset account.

      (Although those are the entries, Paper F3 asks for very little double entry indeed. They will ask for things like ‘what is the profit or loss on sale’ but you do not need t-accounts to answer that (or most of the questions), and using t-accounts is wasting time in the exam.)

  14. Profile photo of Bakhtawer says

    Mr Moffat ,

    Can you please tell me why haven’t you transferred the excess of the new charge of depreciation over the old charge from the revaluation account to Retained earnings? It says in the your notes that we will transfer this every time we revalue.

    Will appreciate your help :)

    • Profile photo of John Moffat says

      The transfer is made from the revaluation reserve, and I have not shown the account for the revaluation reserve.

      The profit on revaluation is transferred to the revaluation reserve.

      We then make a transfer from revaluation reserve to retained earnings of the excess (although in fact, the transfer is not compulsory).

      • Profile photo of Bakhtawer says

        So what you’re saying is that the profit on revaluation will then go in th revaluation reserve after which a transfer will be made to retained earnings in that particular account.If its not compulsory how will we know if we have to make it or not ?Because the balance on revaluation will differ due to it.
        Also do we show this transfer in the Statement of changes in equity ?

      • Profile photo of John Moffat says

        It will be clear from the question whether or not you are being asked about the transfer from revaluation reserve to retained earnings.

        If the transfer is made, then yes – it will appear in the SOCE.

  15. Profile photo of AYO says

    Hi, Mr. Moffat. i don’t understand examples four(4) and five(5) of depreciation; sale of non-current assets and revaluation. please, i need a detailed explanation. also, text question 1.Thanks.

    • Profile photo of John Moffat says

      I do go through both of the examples in the lecture, and give a detailed explanation. You will have to say which bit of it you do not understand, because I cannot repeat the whole lecture here.

      With regard to test question 1, there are various ways of getting the sale answer.

      In the answer at the back of the Course Notes, what I have done is firstly calculate depreciation for the whole year on the 240,000 that was there at the start of the year.
      However, 60,000 of them were not there the whole year – they were only there for three months – and so I have subtracted the other 9 months depreciation on them.
      Finally, some extra assets were bought for 160,000 half way through the year, and so we need to add on 6 months depreciation for those assets.

  16. avatar says

    Hello Sir,

    Thank you for a great presentation.

    I having a little trouble with question 1 in the test at the end of Chapter 6.

    Please could you explain the 60,000 transfer disposal account. Is that to do with the sale of the plant at the end of its life. And why did you work out 9/12s of it when it is only to March?

    • Profile photo of John Moffat says

      There are several ways that you can set out the workings (all obviously giving the same answer).

      The workings in the course notes have calculated the depreciation on the brought forward 240,000 for the whole year. However 60,000 of them were not there for the whole year because they were sold – they were only there for 3 months.
      So because depreciation had been calculated on 240,000 for the whole year, we need to take out 9 months depreciation on those that were sold (because they weren’t there for 9 months of the year).

      We also need to add depreciation on those bought during the year (because they are not included in the 240,000) but for those it is only for 6 months because we only owned them for 6 months of the year.

  17. avatar says

    Hello John,

    Thanks for the wonderful presentation. I was wondering how depreciation on land is handled since its lifetime is not limited. If a company purchases a piece of land, how will its expense show in the income statement?

    • Profile photo of John Moffat says

      Land is one of the few things (and probably the only thing as far as the exam is concerned) that we do not depreciate, because it has an unlimited life.

      Therefore no expense appears in the Statement of profit or loss. The land remains at cost in the Statement of financial position (unless it is revalued).

      Buildings on the other hand must be depreciated. It will usually be over a long time (50 or 100 years), but they have to be depreciated because they do have a limited life.

  18. avatar says

    hi. I know that for example, if i have asset-cost 10000 ,accumulate depr.-2000 . this asset revalued and become 20000.. i knew that revaluation reserve would be 10000 less 2000=8000 and 20000-8000=12000 this amount.. sorry can you help me? In your example 5 i didn’t understand 528000-revalution reserve.

    • Profile photo of John Moffat says

      You can do the double entries in more than one way.
      However the revaluation reserve is 588,000.

      The current carrying value is 3,600,000 – 1,080,000 – 36,000 (depot up to date of revaluation) = 2,484,000
      It is revalued to 3,072,000.

      So the profit on revaluation is 3,072,000 – 2,484,000 = 588,000 (as per the answer at the back of the course notes).

      The double entries are to reduce the ‘cost’ to the revalued amount, and to remove the depreciation. In both case the double entries are to the revaluation account, leaving a balance of 588,000.

    • Profile photo of John Moffat says

      The depreciation is 2% straight line. 2% a year is the same as saying straight line over 50 years.

      (In the same way, 25% straight line is the same as straight line over 4 year; 10% straight line is the same as straight line over 10 year etc.(

      • avatar says

        Good Morning Sir

        Re: Estimated useful remaining life of building.

        I don’t understand how where the 100 divided by 2% came from and how you managed to work out 50 years. please could you show me the workings.

        in Sept 8, 2014 at 6:22pm you mentioned EUL for building is usually over 50 or 100 years. How do I know whether to take 50 or 100 years ?

        Thank you.

      • Profile photo of John Moffat says

        I assume that you had the example in front of you in the Course Notes while watching the lecture.
        The question says that the depreciation is 2% straight line. This means that it is 2% of the cost each year, which is exactly the same as straight line over 50 years (1/50 of the cost is the same as 2% of the cost).
        There is no rule about how long to choose for the useful life – in the exam you will be told (as you were in this question).

  19. avatar says

    What if there’s a mistake in useful life expectation. The asset supposed to be useful for 10 years but was already depreciated over 7 years. What should be done after 7 years of depreciation?

    • Profile photo of John Moffat says

      If the remaining life changes, then the depreciation should be recalculated for the remaining period.
      If it has already been fully depreciated (as it seems from your example) then there is nothing that can be done and it is not depreciated any more.

    • Profile photo of John Moffat says

      If it has been used for 5 year, then the remaining life would be 45 years and the depreciation charge would be the revalued amount divided by 45.
      (The 2% charge was equivalent to dividing by 50)

      (Please don’t ask questions about a Paper F3 lecture under a lecture introducing F7. The tutor will not know what you are asking about and will ignore it, and it simply confuses other people.)

    • Profile photo of John Moffat says

      No – there is no lecture (and there will not be).

      All the asset register is, is a book listing all the assets and (usually) the date of purchase, the cost, and the amount of depreciation charged.
      It is not part of the double entry (and so not all companies bother having the book), but some companies find it useful in order to keep control over the assets that they own.

      The carrying value is simply another word for the net book value.

      If a company does have an asset register, then the total net book value (carrying value) in that book should equal the total net book value (carrying value) in our t-accounts. Obviously if the two are different then someone has made a mistake somewhere.

  20. avatar says

    Dear Sir, please help on BPP revision question.
    A company’s plant and machinery ledger account for the year ended 30 september 2002 was as follow
    Plant & Machinery – Cost
    2001 2002
    1 Oct balance 381, 200 1 Jun Disposal account -cost of asset sold 36,000
    1 Dec Cash addition 18,000 30 Sept Balance 363,200
    399,200 399,200
    The company’s policy is to charge depreciation at 20% per year on the straight line basis, with proportionate depreciation in years of purchase and disposal.

    what is the depreciation charge for the year ended 30 september 2002?

    • Profile photo of John Moffat says

      It is a bit difficult to follow the question because the formatting does not work on here.
      However I will try my best :-)

      There are several ways of getting the correct answer – so if you find a different way more easy, then no problem (as long as you end up with the correct figure!)

      What I do is this (I may be using the wrong figures because of the formatting):

      We started the year on 1 October with a cost of 381200.
      It stayed at that amount until 1 December when we bought more.

      So…….on that amount we have 2 months (October, November) depreciation = 2/12 x 20% x 381200

      We bought more on 1 December and so the cost went up to 399200 (381300 + 18000).
      It stayed at this amount until 1 June when we sold some.
      So…….on that amount we have 6 months ( Dec, Jan, Feb, Mar, Apr, May) depreciation = 6/12 x 20% x 399200

      We sold some on 1 June and so the cost went down to 363200 (399200 – 36000).
      It stayed at this amount until the end of the year (30 September).
      So….on that amount we have 4 month (jun, jul, aug, sep) depreciation = 4/12 x 20% x 363200

      If you calculate the 3 lots of depreciation and add them together, you have the total depreciation for the year.

      (As I wrote at the beginning, other people do it different ways – that does not matter. It is whatever way you find the easiest – the total obviously must be the same whichever way you do it :-) )

      • avatar says


        I followed this same procedure to answer test question 1 because i think they are similar questions but did not get the right answer, please where could i have gone wrong and can you please explain better?

      • Profile photo of John Moffat says

        The questions are indeed similar. I have no idea where you went wrong because you have not written your calculations – I would guess that you have either counted the months wrong or made an arithmetic mistake.

        From 1 Jan to 31 Mar, the cost is 240,000 and the depn is 3/12 x 20% x 240,000.

        From 1 Apr to 30 Jun, the cost is 180,000 and the depn is 3/12 x 20% x 180,000.

        From 1 Jul to 31 Dec, the cost is 340,000 and the depn is 6/12 x 20% x 340,000.

        If you calculate and add up, it comes to a total of 55,000

      • avatar says

        Thank you johnmoffat. but it is still not clear for me on how we end up with a profit of 8,000 with double entry accounting. Please can you show me how the profit is worked out on double entry. Thank you.

      • Profile photo of John Moffat says

        Although I will answer, I really do not know why you want to use double entry – the question does not ask for it (you are not asked for many debits and credits in the exam) and it is wasting time. It is much quicker the way in the answer at the back of the notes (speed is vital otherwise you will not be able to finish the 50 questions).

        However…….when we first bought the machine, the depreciation will have been calculated at $9,000 per year ((70,000 – 7,000) / 7 ).
        So for each of the first two years we will DR depreciation expense and CR accumulated depreciation. The expense goes to the Income Statement each year, but the accumulated depreciation account will have a credit balance of $18,000 at the end of the two years.

        We then decide that the remaining life is in fact only 3 years, and so we recalculate the depreciation charge for the remaining years. The NBV is $52,000 (cost 70,000 – accum depreciation 18,000). We assume that the residual value is still expected to be $7,000 (because we are not told different) and to the depreciation charge from now on is $15,000 per year (52000 – 7000) / 3 years remaining life. (No debits or credit here – this bit is just calculation)

        So each year from then on we will DR depn expense and CR accum depn each year as usual, but with 15,000 p.a.. However we only in fact keep it two more years. So at the end of two more years the balance on accum dep’n will be the 18,000 that was already there, plus two years at 15,000 per year, which gives a total accum depn of $48,000.

        Now we sell it. Remove the cost: CR Machine DR disposal, with $70,000
        Remove the accum depn: DR Accum Depn CR Disposal, with $48,000
        Bring in the cash from sale: DR Cash CR Disposal, with $30,000

        The balance left on the Disposal account is the profit or loss on sale. In this case it is a profit of $8,000

  21. avatar says

    if i’m not wrong, what i’ve been thought in high school was that assets like buildings, don’t depreciate, their value only appreciates…. can anyone explain the logic as in why did we depreciate the building ?

    • Profile photo of John Moffat says

      Before the revaluation, the buildings stood at:

      Cost: 3600000
      Dep’n: 1080000
      NBV 2520000

      Immediately after the revaluation we want the balances to be:

      Cost (revalued amount) 3072000
      Dep’n nil
      NBV 3072000

      To achieve this we need to credit the ‘cost’ account with the difference of 528,000.
      We also need to debit the accum. dep’n account with 1080000

      In both cases the double entry is the revaluation account which means the balance there will be 552,000 (which is the overall profit on revaluation – the change in the NBV of 3072000 – 2520000 = 552,000)

  22. Profile photo of mehnoor says

    After revaluation, we have to depreciate the building based on the new value. However, the depreciation policy stays the same, meaning, to charge 2% straight line. Why don’t you use the 2% but rather calculated the remaining estimated useful life of the building? Will it be wrong if i calculate the depreciation based on the 2%? In that case i’ll have the depreciation as $30720 for the remaining 6 months. Can you please clear this bit for me? Thank you

  23. avatar says

    Please, can you clarify, why we count the expected useful life in secound half of the year, if it says that depreciation policy is to charge 2% straight line? Shouldn’t we just multiply (3 072 000 *2% \ 2) to get secound year’s depreciation expense? Thanks

  24. avatar says

    Dear All,

    please clarify if the balance on ACCUMULATED DEPR. A/C is = 44 522 $ ?

    so on the balance sheet we put:
    a) non-current assets: 3 027 478 $
    building a/c 3 072 000 $
    accum. depr. a/c (44 522) $

    is it correct?

    Thank you so much for your help.

    • Profile photo of Futurediva says

      No, if revalued amount were greater than original cost in NCA a/c, NCA a/c would have to be debited with the difference between the two and the Revaluation a/c credited thereafter. You have to decide on how you will adjust the cost account, whether by a debit or a credit, for it to reflect the revalued amount in the end. And by the way, revalued amount is not greater than current worth. CV= 3.6m – 1.116m= 2.484m < 3.072m (revalued amt)

  25. Profile photo of nzeadall says

    Thank you very much Opentuition, however i’ll be grateful if you could plz specify whether we should add up an Accumulated Profit account? If i read page “the excess of the new charge over the old charge should be transferred from the revaluation a/c to accumulated profits. So, here we have an excess of $ 8522 ($80 522 – $ 72 000). Should this amount be reflected in the Accumulated Profit account?
    Thank you

      • Profile photo of nzeadall says

        @MikeLittle, thank you v much, just one last question if you don;t mind, so in this example, I’ll credit Revaluation Reserve A/C with $588 000 and Debit it by $ 8522. Then, we credit Acc. Profit A/C by $ 8522. Also, what is the purpose of this transfer since we have already accounted for the profit ($ 588000 made in the Revaluation a/c). I mean this is an unrealised profit in any case, why do we need to transfer the excess to Acc. profit a/c? Once again, Thank you so much for your help

    • avatar says

      At the time of revaluation the accumulated depreciation was 1,116,000.
      as 3,072,000 is higher than 2,484,000 it’s a profit.

      You can also see that the depreciation amount has gone up from 72k a year to 89k a year showing that the building is worth more.

      I can’t imagine it’s the sale price but the depreciated amount after 15.5 years. If you calculate that back (89kx15.5years + 3,072,000) then you’ll get something like 4.45m. A tidy profit.

    • avatar says

      at the time of revaluation the accumulated depreciation is 1,116,000.
      We know that the annual amount is 72,000 (2% of 3,600,000). Divide the accumulated dep’n buy the annual figure then you get 15.5 years; i.e. if you charge 72k a year, then it would take 15.5 years to get the balance up to 1,116,000.
      50 – 15.5 = 34.5 years as there is no change in the remaining useful life of the building.
      89k happens to be 2% of the original cost if you calculate the revalued cost back over the previous 15.5 years (ca 4.45M)

      • avatar says

        Hi. I’m confused as to why the useful life needed to be calculated after the asset was revaluated and not before revaluation. To get the figure of 36000 we didn’t need to calculate the number of years? Thanks!

      • Profile photo of John Moffat says

        We need the remaining useful life in order to calculate the new depreciation figure.

        We didn’t need it to calculate the 36000 because we were told the depreciation had been at the rate of 2% of cost (which was the same as saying that the original useful life was 50 years, because 50 years at 2% is 100%!)

  26. avatar says

    Question No 4 on the test section, page 46, which value of the machine is to be used to calculate the new depreciation charge after the useful life was revised to 3 years ? $70,000 or $52,000 ?

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