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FA Chapter 6 Questions Depreciation
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the thing with these questions is that they never come like the examples taught in the lecture and notes.
You cannot expect in the exam that every question will be the same as questions in the lectures – the examiner can ask in a million different ways !!!
If you understand what is explained in the lectures then there should be no problem with the questions.
But that is why you must also use a Revision Kit from one of the ACCA approved publishers – they have lots more questions to check that you really do understand everything. Practice is just as vital as studying to be sure of passing the exam.
Good Morning Mr. John In Q2 they didn鈥檛 mention the year end and I was using 31st Oct as a year end. In exam how may I know the accounting period year if it hasn鈥檛 been mentioned? Thank you
But the last line of the question says what the year end is!!!!
Dear Sir,
Regarding Q5, can you please explain why do we have to subtract the residual value 7,000 twice?
Thank you.
The first time was to calculate the depreciation in the years before the revision of the useful life.
The second time was to calculate the depreciation charge for the years after the revision of the useful life,
Sir Q3 Answer is 84.8(Profit).but sir answer
why 1067.84(profit)explain me sir.
The correct answer is $1067.84 profit. You should get a pop-up window showing the workings for the answer when you submit your answer.
i think he is right. we must not allocate depreciation for car in year of sale.and so the profit must be 84.8
He is certainly not right!! The answer does not charge depreciation in the year of sale!
Again, read the workings carefully that appear after answering the question. The sale occurs on 31 March 2012, which is during the year ended 31 January 2013. No depreciation has been charged for the year ended 31 January 2013.
Good Day Mr. John,
I am really not getting question 2, I don’t understand! why are we using the total cost of all the machines and the depreciation for same as oppose to the actual cost of the machine that we are selling and the depreciation for same? Also, I don’t think I understand how the months and years are counted.
Can you assist me please?
Have you seen the pop-up answer that shows the workings (if not, then you have a pop-up blocker and need to switch it off).
The year is 1 November 2013 to 31 October 2014.
From 1 November 2013 to 31 December 2013 is 2 months, and for these two months the machines were 120,000 and so 120,000 needs depreciating for 2 months.
Then on 1 January 2014 they sold machines that had cost 30,000, so the machines left cost 90,000 and they need depreciating for the remaining 10 months.
The question wants the total depreciation expense for the year and all the machines they own need depreciating. It is straight line depreciation and so it is calculated on the cost – the accumulated depreciation is irrelevant to the calculation.
Have you watched the free lectures on depreciation?
Dear John, I did my workings slightly different but came to the same conclusion. Thus I would like to double check whether is purely coincidental or it’s correct.
depreciation sold item 01.11.2013->31.12.2014 : 2/12*20%*30000=1000
depreciation rest of assets 01.11.2013->31.10.2014: (120000-30000)*20%=18000
total depreciation : 1000+18000=19000
No – it is not a coincidence and is fine 馃檪
Dear John,
Regarding Q2, if the question request for Dep for the year 2014, therefore it should be $15,000. Why must be the 2013 (remaining amount depreciation) to be included in ? Need your assistance as to ensure my understanding on the recognition of depreciation amount is correct.
Thank you
Its ok John. I manage to get the explanation for this. Found it on my own. Important here is the year end which i missed out to see.
Correct (and the year end is a common ‘trick’ in the exam) 馃檪
sir why have we charge depreciation for 2012 in question 3? it is said in the question that no depreciation must be charged in the year of sale. im stucked
The year end is 31 January each year. Since the sale was on 31 March 2012, it was sold in the year ended 31 January 2013 and no depreciation has been charged for that year.
The question says it was sold on 31st March 2012. We don’t have to charge depreciation for 2012, do we?
Please correct and explain if I’m wrong.
Dear John. Thank for your lecture. Great one. But please for the first time i’m so confused with a question. In question 3, i still don’t understand why we charged depreciation in 2012….which is year of sale.
Yes i understand the year ends in 31 Jan 2013 but that accounting year would have started in Feb, 2012. And the car was sold 31 March 2012. So it was sold within the accounting year and as such depreciation shouldnt be charged in that accounting year.
please help clarify.
Thank you
The year of sale is the year ended 31 January 2013, which is 1 February 2012 to 31 January 2013, and no depreciation has been charged on it during that year.
1. At 30 september 20×2, the following balances existed in the records of lambda co:
Plant and equipment:
Cost $ 860,000
Accumulated depreciation $397,000
During the year ended 30 september 20×3, Plant with written down of $37,000 was sold for 49,000. The plant had originally cost of 80,000. Plant purchased during the year cost $ 180,000. It the lambda Co’s policy to charge a full year’s depreciation in the year of acquisition of an asset and non in the year of sale, using rate 10% on the straight line Basis.
What is the carring amount that should appear in lambda Co’s Statement of financial position at 30 september 20×3 for the plant and equipment?
2. what is the different between written off and written down
Please do not ask this sort of question as a comment on a test.
You should ask in the Ask the Tutor Forum. (Although don’t expect a full answer to a full question – you must have an answer in the same book in which you found the question, and you should ask about whatever it is in the answer that you do not understand)
John Moffat, thank alot for the explanation and guidance you have advised me. Please can you explain 2. what is the different between written off and written down?
what is the written down stand for there?
We write off debts if they are irrecoverable – that means we complete remove them.
We write down non-current assets, by depreciating them – this means we reduce their value in the Statement of financial position.
Dear Sir,
I understood answer of question 2. The data 25,000 (depreciation acc) and 10,000(the price of sale) no need for answer. In the exam,wherether abandon of data like this? Thank you!
This question is typical of exam questions – very often not all the data is relevant. The examiner is testing that you do know which of the figures are relevant.
trully sir if yaer end is 31 jan each year.So from 1 january when the car was bought to 31 january 2008 it should 1 month .These date calculations are confusing now
You have not said which question you are asking about.
If it is the first question, then the question says that their policy is to have a full years charge in the year of purchase.
Have you watched the free lectures on this? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well. There is no point in attempting the tests until after you have watched the relevant lectures.
Hi Sir , I’m having trouble in question 2&3 I seem to can get the right answer . Can you please guide me
The answers pop-up with workings after you have attempted the question, so you will have to say which bit of the workings you are not clear about 馃檪
(I do assume that you have watched the free lectures first?)
Hi sir,
For question 3, how did you get the value 7084.80 for the working out of the NBV?
The accumulated depreciation up to 31 Jan 2011 is 2400 + 1920 + 1536 + 1228.80 = 7084.80
(Then add on the 983.04 for 31 Jan 2012 to get the accumulated depreciation at the date of sale )
sorry ,but think we shouldn’t calculate dep for 2012 as in question said ( charge none of the year of sale ) , please correct me if i’m wrong !
You are wrong, because the year of sale is the year to 31 January 2013. So there is depreciation for the year to 31 January 2012.
Hi Sir
Please assist me on question 5
Why is that the residual value remains unchanged after 2 years .Is it an assumption that its should not change or since we are not told otherwise we also supposed to assume that it remains the same.
The residual value is the expected value at the end of its life. It’s total useful life has not changed and so there is no reason why it’s residual value should change (unless of course the question had said that it had changed)
okay i get it thank u sir
You are welcome 馃檪
Hello!
In the question 2, if we sold the machine on January 2014, why do we still depreciate it till the year end?
We don’t!!!
Check the answer carefully – up until January all the machines are depreciated. From January to the end of the year (31 October) only the remaining machines (with a cost of 90,000) are depreciated.
for question 2, the machine had original cost $30000 on 1 April 2012.
Is it another machine and need to depreciate in 2013 also?
In total 2 machines, one cost $120000, one cost $30000?
No – you are not reading carefully enough.
The 120,000 was the cost of the machines, and so it included the one that was later sold.
So you need to calculate depreciate on 120,000 for the months up to the date of the sale, and then for the remaining months on only 90,000 – the cost of the machines remaining.
Love
Okay so I looked back carefully at the dates/workings and I understand now. Thank you!
You are welcome 馃檪
Sir.
For the question 2.
Why the depreciation in year 2014 is $15000?? They already sold the machine ay Jan 2014. I think. The calculating of depreciation in 2014 should be ended at January, not cover till october.
The 15,000 is the depreciation on the remaining machines – the ones that were not sold. Their original cost was 120,000 – 30,000 = 90,000.
hello,
Chapter 6 Practice Ques No.3
the Correct answer is $84.80? Depreciation should not be charged in the yr of Sale that is , in 2012.
Sold in March 2012, the year end is 31 January. that’s! why ..
Because they sole in 2012 March, the year end is 31 January 2012. So need to calculate to 31 January 2012 (1year).
Yeewai: Correct 馃檪
Diva: Check the dates again!
Hi,
I’m also equally as confused as Diva. If the year ended 31 Jan 2012 and the equipment was sold in March 2012, would another year not have begun 1 Feb 2012 – 31 Jan 2013? – As March 2012 is within that accounting year why are we charging depreciation for the whole year? so confused sorry.
Look at the workings that appear after you have submitted your answer.
Depreciation is charged for year ended 31 Jan 2008 (the year in which is what), 2009, 2010, 2011, and 2012.
It was sold during year ended 31 Jan 2013 and so depreciation is charged in that year because there is no depreciation in the year of sale.