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Buildings at cost 1,500,000
Accumulated depreciation of Buildings at 1 November 20X5 $360,000Buildings are depreciated at 5% of cost. At 31 October 20X6 the buildings were professionally valued at $1,800,000 and the directors wish this valuation to be incorporated into the financial statements.
What will be the carrying amount of the buildings in the financial statements at 31 October 20X6?
As per my understanding, the carrying amount of the buildings in the financial statements at 31 October 20X6 should be $1,800,000 because this is the revalued amount.
Book Answer: Buildings $1,065,000 (1,500 – 360 – (1,500 × 5%))
Note: Why the book’s answer has not considered the revaluation.You are correct, and there is an error in the BPP Revision Kit. They should be shown at the revalued amount.
19.3 Tonson
The information below has been extracted from the books of Tonson, a limited liability company, as at
31 October 20X6.
Task 1
Do each of these items belong in the profit or loss account (P/L) as at 31 October 20X6?
DEBIT CREDIT P/L Not P/L
$’000 $’000
Inventory at 1 November 20X5 350 ? ?will the inventory above included in the P/L A/c.
According to me opening inventory is included in P/L A/c in Cost of SalesBut the solution shows it won’t be included.
It is really not a fair question of BPP.
The reason the answer says that it is not included in the SOPL is that although it is needed for the workings of the cost of sales, it does not appear as an income or expense item by itself.
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