Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Replacement
- This topic has 4 replies, 2 voices, and was last updated 6 years ago by MikeLittle.
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- August 26, 2017 at 4:59 am #403581AnonymousInactive
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New part of asset, replacement cost is capitalized. What about old part of asset that we replace, does it treat as an expense? or loss on disposal?
August 26, 2017 at 9:41 am #403621A replacement is not capitalized unless it improves the performance or extends the life of the existing asset
So the old part that is being replaced by a newer improved version is not separately accounted for as a disposal nor as an expense.
It remains as part of the original accounting and continues to be depreciated … I imagine! I’ve never come across that question before!
August 26, 2017 at 11:28 am #403646AnonymousInactive- Topics: 4
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Since the question is too long, it is in BPP kit book question (Elite Leisure) number 44. I wonder where is $25M comes from.
August 27, 2017 at 10:11 pm #403811I’ll check when I get back from holiday – I don’t take BPP material with me … not even for weekend breaks
September 13, 2017 at 11:42 am #407452Propulsion system cost $100 million with an estimated useful life of 40,000 hours
After 30,000 hours it was scrapped
What was the value when it was scrapped?
It’s all explained at the bottom of page 134!
OK?
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