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Oh okay, thankyou. btw i found this in acca hub IAS 16 questions for FA, could be a mistake on their part though.
If they over-provided last year then why is 900 credited? Should it not be a debit in the liability account?
Hello sir, pls help me out with this question from acca hub
Renee bought a piece of machinery for $8,000 on 1st January X1 and incurred directly attributable costs of $2,000. The machine has an estimated life of 5 years with nil residual value. On 31st December X2, Renee decides to revalue the asset to $9,000. The machine was eventually sold for $5,000 on 1st January X5.
At the end of the Year 20X2, what is the carrying value of the machine and the revaluation surplus balance after revaluation?
A. Carrying Value $_____
B. Revaluation Surplus $_____My answer: 6000 and 3000
Their solution along with the answer :
Depreciation: Year 1 (20X1) = 10,000 ÷ 5 = 2,000. Closing balance is therefore $8,000.
In year 2, the machine is depreciated as normal as the revaluation only occurs during year-end (31 Dec X2).
Depreciation charge for Year 2 (X2) = $2,000
Carrying Value at at 31 Dec X2 = $8,000 (opening balance) ? $2,000 (depreciation for the year) = $6,000At year-end, the revaluation happens:
Gain/(Loss) in revaluation = $9,000 ? $6,000 = Gain $3,000
The double entry is: DR Machinery (NCA) $3,000; CR Revaluation surplus $3,000The answer is:
The carrying value $9,000
Balance in revaluation surplus $3,000My query: why is their carrying value in the answer 9000 when they have clearly calculated carrying amount as 6000. It is the market value that is 9000.
Hi sir. I have a similar query.
A company has trade receivables totalling $16,000 after writing off irrecoverable debts of $500, and a loss allowance brought forward of $2,000. The company wishes to carry forward a loss allowance equal to 5% of trade receivables.What will be the effect on profit of adjusting the allowance?
A.$700 decrease
B.$700 increase
C.$1,200 decrease
D.$1,200 increasemy answer was 700 increase.
16000 * 0.05 = 800 so 1200 decrease in allowance this year
(1200) + 500 = (700) so a decrese of 700 in expenses should increase the profit by 700
but the answer provided by acca study hub says 1200 increase (D). pls help me out.Oh so only in consolidated statements the realized profit’s share is considered for NCI but in reality they get their complete share without any reductions due to URP? Or they get only the realized portion’s percentage?
Hi john. Can you please explain why NCI’s profit is also reduced due to unsold goods by P company. NCI is a third party and S co did make a profit by selling goods to P company if we talk about the company on its own and not as a group. I understand subtracting URP from the group since as a whole it is considered that the goods haven’t been sold yet but NCI is a third party and has shares in S Co that did sell goods. So shouldn’t NCI get it’s complete share of profit without URP being subtracted from its profit.