Hi Mike, I think the safety guard could be seen as an improvement to the machinery rather than a component having its own useful life. If we go by the question, it means the safety guard would last longer that the machinery itself because it was acquired later than the machinery and they both have 10 years estimated useful life. Please help clarify this.
“It鈥檚 been reclassified as an investment property that uses fair value model so gains and losses go through statement of income, not through revaluation reserve”
If not, post again, but this time tell me which question it is that you are asking about!
Hi sir, On question 4 depreciating by the percentage, is it not like using the reducing balance method? Because the percentage is usually calculated on the net book value every year and I see in your explanation I’m the answer it is just the first years 2 percent amount spread over all the years. I was just curious. Please explain to me as I am a bit doubting. Thank you very much.
Incidentally, better to repost this on the Ask ACCA Tutor F7 forum. That way everyone will benefit
In fact, if you want a guaranteed reply, you MUST post it on Ask ACCA Tutor F7 page. That way I can guarantee that I’ll see your question – I only rarely look at Latest Comments”
But what about the revaluation of 17, 50,000 as on 31 july? Why this is not considered at the year end even the company has policy of fair value model.
It’s been reclassified as an investment property that uses fair value model so gains and losses go through statement of income, not through revaluation reserve
A full year at $77,000 on the original machine + 3 months depreciation on the safety guard. But the safety guard has a useful life of only 80 months – ie up to the end of the useful life of the original machine
So $40,000 / 80 months is $500 per month and there are three months from 1 September to 30 November
$77,000 + $1,500 is $78,500
adekunlemorsays
Hi Mike, I think the safety guard could be seen as an improvement to the machinery rather than a component having its own useful life. If we go by the question, it means the safety guard would last longer that the machinery itself because it was acquired later than the machinery and they both have 10 years estimated useful life. Please help clarify this.
adekunlemor says
Hi Mike, I think the safety guard could be seen as an improvement to the machinery rather than a component having its own useful life.
If we go by the question, it means the safety guard would last longer that the machinery itself because it was acquired later than the machinery and they both have 10 years estimated useful life.
Please help clarify this.
hlomuka says
i need to know why the re-valuation on 31 July to 1,750,000 is not included in the revaluation reserve
MikeLittle says
Does this earlier response not answer it?
“It鈥檚 been reclassified as an investment property that uses fair value model so gains and losses go through statement of income, not through revaluation reserve”
If not, post again, but this time tell me which question it is that you are asking about!
OK?
ateeq1604 says
Hi sir, On question 4 depreciating by the percentage, is it not like using the reducing balance method? Because the percentage is usually calculated on the net book value every year and I see in your explanation I’m the answer it is just the first years 2 percent amount spread over all the years. I was just curious. Please explain to me as I am a bit doubting. Thank you very much.
ateeq1604 says
*in
MikeLittle says
An exam question will, more than likely, specify for example “2% straight line”
It’s an interesting thought though that you’ve proposed
According to my calculations it will be in the year 2686 before this building is written off – a further 684 years
What does common sense tell you?
njivan28 says
Hi Mike.Why is that the cost of training the existing work force is not capitalised,because i think it will increase the useful life of the assets.
MikeLittle says
Are you in work?
Incidentally, better to repost this on the Ask ACCA Tutor F7 forum. That way everyone will benefit
In fact, if you want a guaranteed reply, you MUST post it on Ask ACCA Tutor F7 page. That way I can guarantee that I’ll see your question – I only rarely look at Latest Comments”
njivan28 says
#smiling#.ohk i’ll post.I thought this is a right avenue because the practise questions are here.
faris says
sir can u please explain question 4 peke plc? 馃檪
Thanks.
MikeLittle says
Before letting the building on lease, Peke had owned that building for 9 years and 4 months.
Annual depreciation was $27,600
9 years and 4 months at the rate of $27,600 is $257,600 so, at date of valuation on 31 May, 2011, the carrying value was $1,122,400
valuation was $1,520,000
So credited to Revaluation Reserve was $397,600
OK?
limon061 says
But what about the revaluation of 17, 50,000 as on 31 july? Why this is not considered at the year end even the company has policy of fair value model.
MikeLittle says
It’s been reclassified as an investment property that uses fair value model so gains and losses go through statement of income, not through revaluation reserve
for8verlik says
question 4 how to reach 397000
pamella says
Question 2,where am i going wrong (800000-30000)/10+(40000/10*3/12) I got $88000
pamella says
Sorry i mean $78000
MikeLittle says
A full year at $77,000 on the original machine + 3 months depreciation on the safety guard. But the safety guard has a useful life of only 80 months – ie up to the end of the useful life of the original machine
So $40,000 / 80 months is $500 per month and there are three months from 1 September to 30 November
$77,000 + $1,500 is $78,500
adekunlemor says
Hi Mike, I think the safety guard could be seen as an improvement to the machinery rather than a component having its own useful life.
If we go by the question, it means the safety guard would last longer that the machinery itself because it was acquired later than the machinery and they both have 10 years estimated useful life.
Please help clarify this.
tashongedzwanashe says
Thank you sir. Your explanation to the question by Pamela is much clearer than the one provided in the answer to the question