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Because as what I remembered in F3, when the bonus issue is financed by the share premium account, if a company issues bonus share ($1 ordinary shares for example), first we reduce the share premium account, the rest is deducted to retained earnings. Shouldn’t we do the same in this exercise?
The question is “The machine has a current book value of $12,000 and a potential disposal value of $10,500 (before $200 disposal costs) and hence has been under depreciated by $1,500 over its life to date. If the machine is to be fit for purpose on the new project it will have to be relocated at a cost of $500 and refitted at a further cost of $800”.
I understand that the relocated and refitted cost is part of the machine’s relevant cost. But I why there is also the net disposal (10300$) ?
