PPE CAPITALIZATION AND CONPUTING

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    Allwell B Joseph
    Participant
    • Topics: 7
    • Replies: 7

    i have three questions to ask,

    1) why is it that they don’t add general overheads in the computation of ppe, my argument is, it involved in bringing the product to the present condition for its intended use.

    2)A company revalued its property on 1 April 2009 to $20m ($8m for the land). The property originally cost $10m ($2m for the land) 10 years ago. The original useful economic life of 40 years is unchanged. The company’s policy is to make a transfer to realised profits in respect of excess depreciation.
    How will the property be accounted for in the year ended 31 March 2010?

    Answer was:
    Carrying value of non-current asset at revaluation date
    (10,000 – ((10,000 – 2,000)/40 years x 10 years)) 8,000 Valuation 20,000 Gain on revaluation 12,000

    but i though i did
    10,000,000/40yrs X 10yrs= 2,500,000

    got the second question from acca website
    please help me its driving me nuts thank you.

    3) why is it that the excess of the depreciation should be debited from revaluation reserve and credited to retained earnings

    Thank You Sir


    Profile photo of MikeLittle
    MikeLittle
    Keymaster
    • Topics: 5
    • Replies: 9630

    I answered this yesterday!

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