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Hello Sir, I’m having trouble finding depreciation for the year using the straight line method and reducing balance method.
At 31st July 20X6 a business non current assets cost $330,000. And accumulated depreciation on the assets was $120,000. The company had not disposed of any non current assets during the year to 31st July 20X7, but acquired an asset at a cost of $79,200 on 1st January 20X7.
Depreciation charged at a rate of 25% per annum. Depreciation charged from first year of acquisition.
Any assistance is highly appreciated.
The statement “depreciation is charged from the first year of acquisition” is not a statement that appears in the exam because it doesn’t really mean anything.
What it is presumable meaning here is “a full years charge in the year of purchase” which is a common statement.In which case, for straight line depreciation we would take 25% of the cost of all the assets which is 330,000 + 79,200.
For reducing balance depreciation we take 25% of the net book value of all the assets which is 330,000 – 120,000 + 79,200Have you watched my free lectures on depreciation? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
(Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – that have answers and workings.)
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