[Griffindor777]

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?

[Griffindor777]

Thank you so much!

[Griffindor777]

Oh I get it now. Thank you so much

[Griffindor777]

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$) ?

[Author]

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