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Sir below is the extract from advent ( 12/04)
at 1.10 20X8 plant had cost 150,000 and accumulated dep=105,000
Plant is depreciated at 20% per annum on cost with time apportionment where appropriate. On 1 April 20X9
new plant costing $45 million was acquired. In addition, this plant cost $5 million to install and commission.
No plant is more than four years old.
Sir i dont understand that they have calculated the dep sepatately for 150,000 full year and then for 50,000 for half year
if this is so then how does this differ from candel 12/08 note ii where they have calculated the amortisation on 20,000 but not on the additional capitalised amount of 4800
in both case dep/amort is on cost
plz explain where i am getting wrong is there a difference between the two, which i am being unable to pickThe difference is in the last line of the big paragraph of point (ii) in Candel:-
“The project is still in development at 30 September 2008”
Until that project is completed and is contributing to revenues / profits we don’t amortise. To amortise whilst the project is still under development is to go completely against the matching concept
Ok, or did you want me to comment on Advent?
no Sir that’s ok.
then y capitalise when still under development ?
or its just that its meeting the capitalisation criteria and once completed then start amortisation .
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