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?

    • Avatar 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. Avatar 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. Avatar 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.

    • Avatar 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. Avatar 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    I read the comments and you said that this lecture is outdated so Do I only view the notes or if this lecture is still applicable for current exams?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 :)

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      The only little way in which it is outdated is in the treatment of the depreciation on the transferred non-current asset.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


      • Avatar 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

      • Avatar of MikeLittle says

        The video recording equipment is no longer as available to us as formerly. No, I haven’t re-recorded the section – I’ll see if I can find time over the coming close season, but thanks for reminding me

      • avatar says

        That would be great, sir. But as I have a exam this session and since the older method is not anymore applicable. So we will deduct the excess depreciation from the PUP and then deduct the net amount from the selling company’s assets?

      • Avatar of MikeLittle says

        Correct. So the only change from the recording is that, instead of adjusting the depreciation in the buyer’s records, the NET pup on the TNCA transfer is adjusted in the seller’s records

  5. avatar says

    I think you have loaded the wrong video because this one up here is exactly the same as the previous video which is “INTER-ENTITY TRANSACTIONS DIVIDENDS EXAMPLE4′ and it doesn’t talk about transfer of non current assets at all ……………can you check it out. Thank you again!

  6. avatar says

    I can view all other videos but I just can’t view the ACCA F7 TRANSFER OF NON-CURRENT ASSETS under chapter 8. I’ve tried it for two days with different devices and different browsers.I’ve used different computers and smart phones but still can’t view this video. It gives me the same thing, it is blank no buttons or whatsoever…I can see the comments under the video but there is nothing on the top where the video supposed to be except the big red title. HELP! Can anybody please help me out here!!!!!!!

      • avatar says

        Thank you so much!
        yes i can play it now and you are right I can’t access youtube here without some “breaking through”
        but thanks anyway!

      • avatar says

        I think you have loaded the wrong video because this one up here is exactly the same as the previous video which is “INTER-ENTITY TRANSACTIONS DIVIDENDS EXAMPLE4′ and it doesn’t talk about transfer of non current assets at all ……………can you check it out. Thank you again!

  7. Avatar of Mahoysam says

    Dear Mr Little,

    Thanks for this. It is all clear, just one little detail which is confusing me, in example 3 – I am not very sure where did we get the figure of 100 from? The non current asset had a carrying value of 80 and it was sold for 90, am really not sure why we calculated it as sold for 100 and therefore the PUP is 20.

    Thank you!

    • Avatar of MikeLittle says

      I think that, if you read the other posts on this string, you’ll find the answer to your question. The lecture MAY have been using an example I made up on the spur of the moment whereas the course notes should be correct

      • Avatar of Mahoysam says

        I see! Apologies – It did not occur to me to check the notes, true, the answer there is correct. Anyway, am glad that it is cleared up now, I was concerned there is a point I have missed which led us to calculate the pup on a S.P. of 100.

        Thanks Mr little.

Leave a Reply