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Good day.
In question 3 of FR Quiz “ACCA FR Chapter 5 IAS16 Questions” the right answer is $17,000. This amount include $9,000 of depreciation charge according to the new revalued amount of the machine and its clear for me how and why we got this figure.
Please clarify why did we include also $8,000 as depreciation charge before revaluation?
In my understanding we should eliminate any existing accumulated depreciation for the asset in case the asset was revalued (p. 31 Chapter 2 FR study text book).
Thank you.You are correct in that the accumulated depreciation balance is removed but prior to this there will have been depreciation charged on the asset that will have been recognised through profit or loss. Don’t forget that the accumulated depreciation balance is a SFP account and not part of the SPL.
Thanks
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