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  1. 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.

  2. 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!

    • 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)

  3. 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

    • 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.

  4. Hi John,

    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

    • 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 🙂

  6. 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.

      • 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.

  8. 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

  9. Hi sir,

    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?

    • 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).

  10. 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!

    • 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.

  11. 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

  12. 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

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