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note (ii): For the plant figure of $10 which comprises of $3, $4 and $3-Fin O/H. The last $3-Fin O/H could not be understood by me how it is derived. Just only this area.
Then for property. The period was 20 years for the revalued amount of $48,000. Then heck figure of 16 years of amortization has been derived in the answer. I really not have been able to understand how did it come there? How 4 years are past from now?
Many Thanks
Your question “The last $3-Fin O/H could not be understood by me how it is derived. ”
Extract from note (ii): “The direct materials and labour were $3 million and $4 million respectively. Production overheads are 75% of direct labour cost”
Your question: “The period was 20 years for the revalued amount of $48,000. Then heck figure of 16 years of amortization has been derived in the answer. I really not have been able to understand how did it come there? How 4 years are past from now?”
Extract from the question: “On 1 October 2010 an independent surveyor valued the leased property at $48 million, which the directors have accepted. The leased property was being amortised over an original life of 20 years which has not changed”
The leased property cost $50,000. It was bought 4 years ago and has suffered 4 years’ worth of amortisation giving us a balance of $10,000 on the Accumulated Amortisation account
Now, if it had originally an expected life of 20 years and 4 of those have gone and the expected death date of the leased property hasn’t changed , then how many more years does it have left before the lease finishes
OK?
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