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THERE ARE NO TYPING ERRORS IN POSTING THIS QUESTION:
Halfway thru the year an asset is identified as held for sale. at the start of the year the CV was 150,000 (original cost 200,000 two years ago). the asset has a 10 year life and is depreciated on a straight line method.
what is the dep charge for the year?
a. 15000
b. 12,500
c. none
d. 25000the answer given is b.
**** if the ‘remaining life is 10 yrs’ then, 150000/10=15000 and half of 15000=7500.
**** if 10 years means from the date of purchase, then
dep=200,000/10=20,000we are in the 3rd year. so the cv must be 160,000. there must have been an impairment loss which brought the cv to 150k.
with 8 years remaining, 150000/8=18750 and half of that is 9375
how does 12500 come in play??
thanks
No idea! My answer would have been 200,000 / 10 / 2 = 10,000
150,000 is presumably because we have owned the asset for 2.5 years as at the start of this year so it’s not necessarily 2 years @ 20,000 + 10,000 impairment
I’m going to have to ask you to check the question again even though you affirm that there are no typos in what you have written
this from text part 4 of Test your Understanding 4, chap 5.
i think there’s a printing error cause i have noticed a few ….
am pretty sure ur answer is correct…
thank you
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