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Sir , this is just an extract from a long construction response question in exam kit Kaplan.
Pricewell entered a contract with customer and acquired a specialist plant 1 October 2008 at an of amount of $8million with no residual value at the end of the contract and depreciation is on a monthly basis. The work done to date – 31 March 2009 which is end of year Finacial reporting per trial balance and the work to be completed is to 30 Sept. 2010.Answer : $8,000,000 * 1/2 * 6/12 = $2,000,000
I understand the 6 months ie 6/12 but what is the 1/2 doing there though depreciation is on monthly basis ?
How do we get the monthly depreciationPlant was bought on 1 October, 2008 and has a life of 2 years to 30 September. 2010
From 1 October, 2008 to the year end of 31 March, 2009 is 6 months …
… and 6 months is one quarter of 2 years …
… and one quarter of $8,000,000 is $2,000,000
OK?
Incidentally, both these posts of yours appeared only now on my machine!
So far as I am concerned I have answered you within 30 minutes!
Very strange
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