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some questions about construction with the specialist plant ,how to deal its depreciation charges?And why the difference arise between two question’s answer?
Where’s the inconsistency? In both questions the amount of plant allocated to the contract is the depreciation specific to the particular year in question
Please explain where you are failing to understand
thank you for your reply firstly.
i still can’t understand it.
The question in year09. the total estimated profit including the plant (8000.it’s the initial cost and no depreciation charges)
However in year10.the plant (12000-3000? why not use the initial cost ?)
sorry .I get it seemingly a little…
removing 3000 just due to the residual value?and the residual value shouldn’t be recorded in?
right ?
I am very sorry to waste your time.
thanks !It’s not a waste of time if you understand it at the end! Yes, the $3,000 residual value will not be a part of the cost of the contract because ….. we can sell it at the end of the contract. In the other example, the examiner clearly says that the plant cost $8,000 and will have no residual value.
OK?
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