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July 24, 2018 at 1:44 pm
Dear sir,sorry to comment but,to find the Acquisition Amount for NCA, You have credited the Net book val of the asset. What if i credit 30,000(Actual sale amt), and debit 10,000 to the SOPL a/c (profit on sale). Acquisition value remains the same and it is more logical to me.
John Moffat says
July 24, 2018 at 3:52 pm
It doesn’t matter how you get the figure – you cannot be asked to write up t-accounts in the exam and so they are only workings for your own benefit.
July 3, 2018 at 11:39 pm
Hello Mr Moffat,
I’ve seen the questions and your replies concerning balancing figure for acquisitions of NCA. I’ve one more question on the same topic – if the B/F and C/F amounts for non-current assets given in the SFP are net book values (carrying values) which means cost less acc. depreciation AND accumulated depreciation INCLUDES ALREADY the depreciation charge for the passing year – why do we deduct the depreciation charge for the year AGAIN while working out the missing figure? Isn’t it doubling? Please help me understand. Thank you very much!
July 4, 2018 at 8:31 am
Even if there were no purchases or sales of NCA’s during the year, the net book value would change over the year because of the depreciation charged during the year.. (The cost would remain the same, but the accumulated depreciation would increase over the year)
July 4, 2018 at 9:45 am
Isn’t the C/F amount equal to the ending balance on NCA a/c which is already net of depreciation charge for the year? Thank you.
July 4, 2018 at 1:43 pm
Yes – which is why the carried forward balance will be lower than the brought forward balance.
May 29, 2018 at 9:43 am
Dear John, Refer to the dividends received, as per notes it could be part of operating or investing activities. However in the video you mentioned that it could be part of financing, please clarify. May be I misunderstand 🙁 Thanks
May 29, 2018 at 4:49 pm
No – you misread or misheard 🙂
Dividends received appear under the heading cash flows from investing activities.
It is dividends paid where you have the choice – they can appear either under cash flows from investing activities, or cash flows from financing activities.
May 25, 2018 at 7:47 am
how would it appear on a t account the calculation of tax paid for the year? because I was starting it with a balance b/f on credit of 30.000 and an expense for the year dr of 39.000 with a cf of 20.000 cr. but the result is all wrong.. the tax balance bf of 30.000 at the start of the year it should be a liabilities and go on the cr side. the expense of 39.000 an expense for the year on the dr side and the cf of 20000 on the debit side. can you please help me in understanding what is wrong? thank you
May 25, 2018 at 5:46 pm
On the tax liability account, you start with a credit balance of 30,000. You credit cash and debit the tax liability account with the cash paid (which for the moment we don’t know). You have 20,000 on the debt side at the end of the year (to carry forward as a credit).
With the expense for the year of 39,000 we credit the tax liability account (because it makes more owing) and debit the profit and loss account.
The missing figure is the tax paid and is 49,000.
Appreciate that you cannot be asked to write up t-accounts in the exam 🙂
May 28, 2018 at 7:03 am
thank you very much for your quick and clear explanation as always…
May 28, 2018 at 7:44 am
You are welcome 🙂
April 9, 2018 at 3:50 pm
For example A, may I know how to get the dividends paid amount of $ 16,000?..
April 10, 2018 at 6:59 am
It is given in note 3 of the question, at the top of page 72. (I assume that you have downloaded the free lecture notes?)
April 10, 2018 at 7:53 am
Ohh found it! oh my god..I didn’t look at the page 72..haha Thank you!
April 10, 2018 at 1:29 pm
May 30, 2017 at 1:58 pm
Hi John! How about solving the questions in the part B of the Computer-Based exam: when we are writing, e.g., the Profit or Loss on sale of NCA – should we write the figure with a minus or just a positive number? Because in here we have written (10,000). So, in the exam, what should we write? -10000? or there will be smth like :”LESS: Profit or Loss on sale of NCA” and we should write just 10000? Thank you.
May 30, 2017 at 4:22 pm
Unless the question does say something like you wrote at the end, to software is programmed to accept either ‘-10000’ or (10000), so don’t worry 🙂
May 31, 2017 at 10:31 am
Thank you! Because when I was trying to solve CBE specimen Part B on consolidation, the software did not give any points for the answers with a negative sign, e.g. Less: Distribution cost. The correct answers is -2010, but the software does not give any points for -2010! When you write 2010 instead the points are given. Now I do understand: anytime we see the word “LESS” we should write a POSITIVE ANSWER if the figure we want to write is negative and NEGATIVE answer if the figure we want to write is positive (e.g. there happened decrease instead of increase in inventory, and the question tells us: “LESS: Increase in inventory). I hope it’s correct. Thank you again.
May 31, 2017 at 5:12 pm
That is correct – you need to read carefully 🙂
August 28, 2016 at 2:52 pm
If such a question was posed to us in an exam, would be okay to assume all the dividents were paid in cash?
August 28, 2016 at 3:18 pm
Yes – unless you were told that there were dividends owing at the beginning and/or end of year (on the Statement of financial position).
July 31, 2016 at 1:24 pm
Hello sir, If dividend payable 1st January 2015 – $80 & 31 Dec 2015-$ 116
Regained earnings show at 1st January 2015 – $36 31st Dec 2015 -$ 95
8 percent redeemable preference share of $1 each. At 1st January 360 31st Dec 240
Profit after tax at 1st January -124 31st Dec -175 What would be the dividend paid? Sir please help me
July 31, 2016 at 1:40 pm
Please don’t post this as a comment on a lecture. You must post it in the Paper F3 Ask the Tutor Forum.
June 19, 2016 at 12:05 pm
In the given information for example 1, it says ‘The asset sold had originally cost $50,000 and had a net book value of $20,000.’
If so, what happens to the deprecation cost of $30,000 that occurs? Or is that already included in the given depreciation of $40,000?
So it is always the Net Book Value we look at when we need the amount for disposal? Do we just disregard the original cost?
June 19, 2016 at 3:07 pm
The depreciation would relate to previous years – we are only interested in this years depreciation charge.
If you are given net book values as the balances, then we only need the net book value of the asset sold.
If the balances are given for both cost and accumulated depreciation, then you need to remove the cost and depreciation of the disposal separately (as normally in the entries for the sale of an asset, as covered in the lectures on depreciation).
June 20, 2016 at 3:56 pm
Thanks for your clear explanation and a quick reply 🙂
June 21, 2016 at 8:23 am
May 11, 2016 at 11:23 pm
Sir, Ive gone through the comments and noticed that several people asked this question, but I still don’t get it. In you example, depreciation amounted to 40,000 as given by the question, you didnt add the depreciation of the asset that was sold though -> $30,000. Why?
I’m only getting confused when I try and apply your method, which is step one to deal with non-current assets to question 19.4 in the BPP revision kit. They add the depreciation of the asset sold to the accumulated depreciation that was calculated in the question. They also work out the non current assets t-account all at cost, rather than carrying value, which we also have? Could you clear this up? I would greatly appreciate it!
May 12, 2016 at 5:55 am
It depends whether the question gives you the cost and accumulated depreciation separately in the Statements of Financial Position or (as in the lecture example) simply gives the net book value in the Statements of Financial Position. Since in this example we only have the net book values, we only adjust by the NBV of the asset sold.
March 4, 2016 at 10:25 am
Dear Mr. John,
First of all let me thank you for your spectscular lectures which helped me clear my F2 paper in just few days.
In the lecture here, you have credited the non current assets with the net value (20000), but in the previous lecture when an asset is sold it was credited at the full actual cost.
Kindly explain why ?
I believe net value is the cost – Accumulated depreciation
March 4, 2016 at 10:56 am
It is because we only know the net book value at the start and end of the period – we do not know the cost and accumulated depreciation.
January 22, 2016 at 2:36 pm
Hi Sir, Can you explain for me in the Example 1, When you calculate the value of acquisition asset during the year = CL+ depreciation + disposal- OB. I just wonder if the Closing balance and OB of the assets on the balance sheet are the net book value ? ( because I think they deducted depreciation twice ?)
Thank you very much, Thao Huyen
January 22, 2016 at 6:14 pm
The values in this question must be at net book value, because that is the final value that shows in the Statement of financial position.
January 23, 2016 at 3:20 am
I think so,but why you less depreciation again? I think the purchase of asset would be by CL + disposal-OB= 545+ 20-410=155 ( your answer is 195 because you also added depreciation????)
January 23, 2016 at 7:59 am
The opening balance will be reduced by the depreciation for the year, reduced by the NBV of the disposals, and increased by the cost of the acquisitions. Since we know what the closing balance is, the acquisitions must be the missing figure.
January 25, 2016 at 7:01 am
I understand now. Thank you very much :).
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