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Hi Sir,
BPP Kit Sec A&B Questions:
52. Why we cannot include “Early Settlement Discount” in the NCA?
What’s the correct accounting treatment for Early settlement Discount?59. Why repainting cost should be expensed? I thought “Repainting” can be seen as “Revision” and caplitalised?
63: Why Option A and Option B are both wrong?
Recognition of Development cost to Intangible Asset:
A: The asset has been completed and is available for sale or use (I think fits the rule “Technically completed & Expect to Use/Sell”)
B: It’s possible that Asset can be sold or used (I think it fits the rule “Expects to sell/use”)68. When we calculate the Depreciation charge for Existing Plant for yr ended 30 Sep 20×9, why don’t we use carry amount 45 (at 1 Oct 20×8)? Why do we need to use the Historical Cost 150?
I think the Depreciation for Existing plant should be 45*20%=9Thank you very much for your help.
52. Early settlement discounts are income through profit or loss, as seen in financial accounting.
59. Repainting is maintenance as it does not improve the performance of the assets and just restores it to its previous state.
63. For A the asset has already been complete so we’d have been capitalising the costs at an earlier date and for B the word possible is trying to catch you out.
68. The depreciation is 20% on cost.
Thanks
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