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Hi Chris,
Can you please help me with the below q?
The follwing TB relates to a property which is owned by veeton as at 1 april 20×4.
Dr
Property at cost 20 years orginal life 12000
Cr
Acc depr as at 1 april 20×4 3600On 1st october 20×4 follwing sustained increase in propery prices veeton revalued its property to 10.8m.
What will be depr charge to splfor year ended 31 march 20×5?
Then the answer is as follows:
6 months depr 12000/20yearsx6/12= 300 000. I am ok with that.
I dont understand why below we have 13.5 yeras?
6months depr from reval 31 march 20×5 10800/13.5years x 6/12= 400 000.
Total depr 700 000.Should not this be 18.5years?
Am i missing something?Thank you for your help.
A.
Hi,
If the accumulated depreciation is 3,600 at 1 April 20X4 then we have owned the asset for 6 years already, given that the annual depreciation was 600 (12,000 / 20 years). So at the start of the year, there are 14 years of the asset’s life left and 13.5 years left when the asset is revalued half way through the year.
Hope that clears it up, it’s a tricky one for sure.
Thanks
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