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Accounting Conventions and Policies – ACCA Financial Accounting (FA) lectures

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  1. I don’t understand why in times of high inflation profits will be too high using historical cost(the last example you gave) – the depreciation will be proportionate to original cost which is lower than it should be?

    • If the current cost is much. higher because of inflation, then it can be argued that the depreciation charge should be much higher as well. In fact we do not charge higher depreciation which means that the profit is higher than it would be if we had charged higher depreciation.

      • I’m asking that if we are valuing the NCA using historical method, why we want to revalue that after some years?
        If we revalue then the original cost is changing, isn’t it?

      • Although we don’t often revalue, we might decide to do it if the true value of the asset is a lot higher than the value at which it is showing in the accounts. It is not that the original cost changes, but we replace the original cost with the revalued amount. I show all this in my free lectures on limited companies.

  3. Thank you so much for all the lectures. I’m just hoping that the next few lectures for ACCA aren’t done by anyone else as the way you explain things makes everything so clear and easy to understand.

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