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Hi , Can you help me with the question below :
A business non-current assets had a carrying value of $125000. An Asset which cost $12000 was sold for $9000 making a profit on disposal of $2000.
What is the new carrying value of non-current assets ?Kind Regards , 🙂
The profit on disposal is the difference between the sale proceeds and the carrying value (net book value).
Since it was sold for 9000 and there was a profit of 2000, it must mean that the carrying value was 7000.So……the new carrying value of the remaining assets will be 125,000 – 7,000.
Hello sir, Kindly give me explanation to this question
On 1st January 2008, Wootton Ltd has a building in its books at cost $380,000 , net book value $260,000.
On 1st July 2008, the asset is revalued at $450,000 and Wotton wishes to include that revaluation in its books. Wootton’s accounting policy is to depreciate buildings at 3% straight line. The depreciation charged to the SOCI is?
Ans: $12,450 it is the correct answer.
Kindly solve it with explantion how to do…ThanksYou have not said what the year end is for the company. I assume that they have a year end of 31 December.
If that is the case, then for the first six months up to the date of the revaluation the depreciation will be based on the original cost and so will be 6/12 x 3% x $380,000 = $5,700.
For the second six months, the depreciation will be based on the revalued amount and so will be 6/12 x 3$ x $450,000 = $6,750.So the total depreciation expense for the year is 5,700 + 6,750 = $12, 450
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