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1. At 30 september 20×2, the following balances existed in the records of lambda co:
Plant and equipment:
Cost $ 860,000
Accumulated depreciation $397,000
During the year ended 30 september 20×3, Plant with written down of $37,000 was sold for 49,000. The plant had originally cost of 80,000. Plant purchased during the year cost $ 180,000. It the lambda Co’s policy to charge a full year’s depreciation in the year of acquisition of an asset and non in the year of sale, using rate 10% on the straight line Basis.What is the carring amount that should appear in lambda Co’s Statement of financial position at 30 september 20×3 for the plant and equipment?
this part of the solution deduction 80,000 from the total cost $ 860,000
and deduction 43000 from $397,000 instead of deducting 37,000 from $397,000. can explain please?2. what is the different between written off and written down
1. The cost must show the cost of the assets remaining, and so we subtract the cost of the asset sold.
The accumulated depreciation must show the total depreciation on the assets remaining, and so we subtract the total depreciation on the asset sold.I do suggest that you watch my free lectures on depreciation.
2. Writing off is removing an asset completely, and usually only applies to receivables that are irrecoverable.
Writing down is reducing the value of an asset, and usually only applies to non-current assets (and is depreciation).
Mr. John Moffat I understood that written down means carrying amount or book value and we can use the position of carrying amount or book value
But that is what I have written!!!!!
The question asked what writing down means – it means depreciating, which reduces the value of the asset on the Statement of financial position.
The written down value (or carrying value) is what is arrived at after doing the writing down (i.e. depreciating) and is the value that appears on the Statement of financial position.
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