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Acc depreciation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Acc depreciation

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 7, 2018 at 9:44 pm #441209
    Oyinda
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    During the year S sold some PPE to H for $65,000. It had cost $100,000 when new, 4 years ago and its useful life of 9 years had not changed.
    Estimated scrap proceeds of $10,000 were revised on transfer to H to $20,000. It is group policy to charge depreciation on a straight line basis with a full year’s charge in the year of purchase and none in the year of sale.

    What adjustments are necessary on consolidation and identify in which company’s records those adjustments should be?

    AND

    Immediately after the acquisition of the subsidiary on 1 October 2010, P transferred an item of plant with a carrying amount of $4 million to S at an agreed value of $5 million. At this date the plant had a remaining life of two and half years. P had included the proft on this transfer as a reduction in its depreciation costs. All depreciation is to be charged to cost of sales in the statement of proft or loss for the year ended 31 March, 2011

    March 8, 2018 at 6:40 am #441262
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23323
    • ☆☆☆☆☆

    And what is it about the answer that you don’t understand? Where are you going wrong?

    For the first question I could really do with some dates – date of transfer and date of accounting year end

    If my assumptions are correct, my answer to the first question is to reduce TNCA in S by $6,000, and …

    … for the second question is to increase cost of sales by $1,000

    But give me those dates and tell me specifically what it is that you don’t understand in the printed solution

    March 8, 2018 at 8:27 am #441286
    Oyinda
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    I do not understand how the redcution in tnca is 4,000 when the profit gain is 5000 so the credit ppe should be 5,000 debit and ret earnings increase by 5,000

    For the second, i recognized a 1mil profit so dr P’s ret earnings and credit its tnca I dont know how it is a 800.

    Thanks.

    And there are no dates. I copied the question as it was on your mini exercises

    March 8, 2018 at 9:33 am #441310
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23323
    • ☆☆☆☆☆

    Because there is depreciation to be charged on that unrealised profit so that also needs adjustment

    This is all graphically explained in the free video lectures!

    For the second one, again there’s the depreciation affect – check out those free video lectures and see how it’s all explained

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Acc depreciation’ is closed to new replies.

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