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a)In 17.17 question of BPP revision kit
300 which is part of previous year accrual(previous year expense) and 400 which is also previous year expense(600*2/3) why is it added for the current year’s SOPL?
b)In 34.6 question of BPP revision kit
The estimation of the remaining useful life is done in the year end of 31/Dec/20X3. So the depreciation should be calculated until 31/Dec/20X3 and from the year 1/Jan20X4 the depreciation should be calculated according to the revised useful life. So the answer should be:
15000*3= 45000
160000-45000= 115000
115000-40000= 75000
75000/3=25000
So the carrying amount should be 115000-25000= 90000
Am I right?a) The accrual at the end of last year was 300. It turns out that it was estimated wrongly and should have been 400. However as I explain in my free lectures, we cannot now go back and correct last year. The correction automatically happens this year – we simply subtract the opening accrual from the amount paid this year in the normal way.
(The layout in the answer is wrong – the 300 should be on the credit side of the account. However the answer of 3,320 is correct. The 300 has been subtracted, not added!)b) No – the answer in the Revision Kit is correct.
When we come to calculate the depreciation on 31 Dec X3, we have decided at that date to change the useful life. Therefore we calculate the depreciation on 31 Dec X3 using the new useful life – the change should be applied for the year ended 31 Dec 20X3.
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