1. avatar says

    Could you please explain, the example says, that assets fully depreciated in the year of purchase and none in the year of sale.
    Is this a kind of examiner trick? because we do have a sale (to our subsidiary) but we still charge depreciation?

    • Profile photo of MikeLittle says

      Yes, but it’s the subsidiary that is charging depreciation because the subsidiary has just bought the asset.

      The parent has sold the asset and therefore is not charging depreciation (in the year of sale)


      • avatar says

        PUP = Provision for Unrealised Profits :D

        Quick and easy way for PUP:
        Profit from transfer / number of years remaining useful life

        Profit from transfer less answer above = PUP

        That diagram helped me understand the fast way to calculate.


  2. Profile photo of jay0v says

    Great lectures Sir, I’ve Passed my 5 exams (F1, F2, F3, F4, F6) on first attempts with the help of opentution. Without these i would have been stuck in ACCA forever. Thank you for sharing the great knowledge and helping us.

  3. Profile photo of Accountmanaic says

    sir, i’m madly in love with your delivery. impeccable lectures… but i just wanna be sure if i could, in the adding of TNCA of Lina and Asta, just reduce the assets by only the net adjustment (5) rather than -10+5. Just don’t like losing silly marks so i wanna be sure…. thanks sir.

    • Profile photo of MikeLittle says

      You can expect two types of depreciation in the F7 exam – normally it’s straight line and reducing balance. But sum of the digits method has been asked and, in a recent question 5 (I think) there was a “complex asset” question involving 5 (I think) elements of a ship being depreciated in different ways over different periods of time. Yes, question 2 will typically have both s-l and reducing balance, but others could be in there too

  4. Profile photo of hamzaharoon says

    Dear Sir Mike,

    I read the comments and you said that this lecture is outdated so Do I only view the notes or if this lecture is still applicable for current exams? Please do reply me asap, Thanks in advance :)

    • Profile photo of MikeLittle says


      The only little way in which it is outdated is in the treatment of the depreciation on the transferred non-current asset.

      In the lecture the extra depreciation calculated on the profit element of the transferred asset is adjusted in the records of the buyer.

      This has now changed and the NET gain on transfer, net after the depreciation, is adjusted in the records of the selling company – so there’s no adjustment to be made to the records of the buying company


      • Profile photo of hamzaharoon says

        Thank you sir, that means its still applicable now with only a little bit of exception of treatment of non current assets transferred, Thanks Again I understood, God bless you! :)

      • avatar says

        Mike, every thing fine but this changes in the net effect of profit and dep changed by whom. I mean by IAS or IFRS can you please give the reference.

        Thank you sir, God bless you
        Can you please mark the reference through which the changed affected

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