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ACCA FR Chapter 5 IAS16 Questions

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    • I agree. There’s nothing in the question that indicates Triage Co hasn’t already correctly accounted for the depreciation on the new equipment, the student is just supposed to guess that fact.

  3. Have the same question as StefanosG

    StefanosG says

    January 22, 2021 at 4:55 pm

    Why do we depreciate on 9 years estimated life while only 6 months have past since the purchase. Shouldn’t it be 9.5 years ?

    Thanks

  6. Hi Sir,

    The new machine bought on 30 september 20×5, the depreciatio start from Sep 20×5 to 31 mar 20×6, which is 7 month in total.

    But why the deprecation only counted for half year instead of 7 month?

    • no geo, depreciation starts only from October 1 20×5 and that makes it to half year.
      if the same was purchased on 1 of September instead of 30 sept. then your argument is correct. thats how it works.

    • Because costs for major overhaul should be capitalized to PPE carrying value, and then depreciated over useful life. Think of it like a revaluation.
      This cost is directly attributable to PPE, so it shouldn’t be just expensed.

  8. I think no 4 answer is wrong
    The correct is

    (72100-10000) =62100
    (28100-750)= 27350
    62100-27350= 34750
    34750*.15= 5212.5
    (10000*.15)/6= 750
    The depreciation is 5212.5+750= 5962.5

    • That $750 shown in the second line of your post presumably relates to the half year 15% on the new $10,000 purchase

      HOWEVER, that accumulated depreciation figure of $28,100 is shown in the trial balance BEFORE the year’s depreciation charge is accounted for

      So that $750 is NOT already included within the $28,100

      The calculation is therefore $10,000 @ 15% for half a year = $750

      and 15% of ($62,100 – $28,100) is 15% x $34,000 = $5,100

      So the depreciation charge for the year is $750 + $5,100 = $5,850

      OK?

    • The financial year end is June so the period that we are looking at is 1 July X3 to 30 June X4

      6 months depreciation from 1 July X3 to 31 December X3 is 1/2 * 10% * $160,000 AND

      6 months depreciation from 1 January X4 to 30 June X4 is 1/2 * 1/9 * $ 162,000 (1/9 because the revaluation from $144,000 to $162,000 on 1 January X4 did NOT change the estimated useful life)

      OK?

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