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January 21, 2018 at 12:01 pm
Hello, In the first question of Vane plc why the amortisation is charged from Nov to Jan and then Feb to march? I did it directly from Nov 2012 to march 2013? If we consider calender year shouldn’t the amortisation be done from Nov to 31 Dec and then Jan to march? Please answer my doubt.
November 23, 2017 at 11:39 pm
Hello! Why don’t you capitalise the development expenditure from November to January? Why is it expense? I am about the first question.
Thanks in advance!
November 24, 2017 at 6:06 am
Because there was no certainty of its economic viability until 1 February
November 24, 2017 at 6:50 pm
Thank you very much for your reply! Can I use your lecture in order to prepare for F7? Or there are some big differences with P2?
November 24, 2017 at 9:41 pm
Yes, you can use the F7 lecture
November 23, 2017 at 11:19 am
and for question 2, why don’t we amortise the capitalised development expenditures for the two months? Is it because the project is still in development?
November 23, 2017 at 1:38 pm
Correct – the concept of amortising an intangible non-current asset is the same as depreciating a tangible non-current asset ie we are matching the expense against the related revenues that are generated from the use of those assets
And if development is still in progress there is no revenue yet being generated and so no amortisation is yet appropriate
December 4, 2017 at 6:12 pm
thank you so much!
December 5, 2017 at 12:42 am
You’re very welcome
November 23, 2017 at 11:13 am
For Question 1, so when we have a reducing balance basis for amortisation, we don’t time aportion it?
November 23, 2017 at 1:33 pm
Correct – too tricky to time apportion on a monthly basis without the use of an Excel spreadsheet
November 2, 2017 at 5:33 pm
where did the 25,000,000 in question 3 cpt26 come from
November 2, 2017 at 7:00 pm
3 years 9 months depreciation at the rate of $4,000,000 per annum ($40,000,000 / 10 years estimated useful life)
That’s $15,000,000 depreciation and the cost was $40,000,000
November 17, 2017 at 7:15 pm
Sir, how did you get 9 months? which period are you using?
November 17, 2017 at 9:11 pm
Isn’t it 1 June 2013 to 1 March 2014?
July 25, 2016 at 3:14 pm
how to get questions relevant to the new exam structure of September 2016?
February 22, 2016 at 1:29 pm
Hi sir.. How to simplify question number 1 ?
February 22, 2016 at 7:22 pm
I’ve just recalculated question 1 and I think the answer should be $4,400,000 not $4,800,000
It’s $2,400,000 (30% x $8,000,000 brought forward) $1,200,000 (4 months @ $300,000 per month) $800,000 (2 months @ $400,000 per month)
Correction will be made
March 2, 2016 at 4:31 pm
Should the amortisation not be time apportioned though? so: $800,000 x 30% x 2/12 = $40,000 $300,000 x 4 months = $1,200,000 $400,000 x 2 months = $800,000 Total = $2,040,000
March 5, 2016 at 3:53 pm
Isn’t 300,000 research cost and it should be expensed ?
June 1, 2016 at 3:34 pm
It is correct the way it is, why are you adding up 800 000 to the expenses?
June 1, 2016 at 3:47 pm
When I prepared the answers 3 weeks ago, I changed my mind and I’m happy that $4,800,000 is correct
August 5, 2017 at 2:11 pm
In my opinion the correct answer should be 3,600, with calculations as below: Amortization Expense = 2,400 Research Expense = 1,200 Total in P&L = 3,600
31 Oct onward monthly development cost @ $400,000 should be capitalised.
August 5, 2017 at 3:27 pm
It wasn’t until 1 February that the project was forecast to be viable so those 3 months’ (November, December and January) development costs were spent on a project that had not as yet been determined to be profitable
The answer $4,800,000 is correct
Don Thadeuse says
February 11, 2016 at 3:32 am
can explain me how you have arrived the above answer of $ 20,160?
February 20, 2016 at 6:10 pm
Hi, have you been responded to. I am so confused , I don’t understand how 20160 is the right option
March 5, 2016 at 5:54 pm
Is your answer working out as 21,000 ?
March 5, 2016 at 11:31 pm
If your looking for a response from Mike you will do better to put your question on the ask the tutor pages! I asked him a question in this thread some time ago and he never replied but I put it on ask the tutor and he came back to me the same day. I dont think he looks at recent comments very often but hes always looking at ask the tutor
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