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Hi Sir,
It’s about the question 7.14 on BPP. I got the same T- account with which in the answer, but why they totally reverse the Debit and Credit in the correct choice? Thank you for your help, sir!
I am guessing that it is the disposal account that is confusing you.
They have debited the accumulation depr’n account and credited the disposal account; and they have credited the cost account and debited the disposal account. These are both the correct entries.
The remaining entry is to debit cash and credit the disposal account.
As a result there is a balance remaining on the disposal account – the loss on disposal of 35,000. This is moved to the SOPL – credit disposal account, credit SOPL.
I don’t know why BPP have bothered writing up the t-accounts. They are not needed and because of the time pressure in the exam you will not have the time to write them all out.
I assume that you have watched my free lectures on depreciation? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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