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Calculating Depreciation for cashflow

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Calculating Depreciation for cashflow

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • April 19, 2021 at 2:48 pm #618221
    joshuautazi
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    I was not given the value for depreciation, I have been given the accumulated depreciation for the two years. I took the difference and got a value for depreciation which I used in calculating the net book value and also added to profit before tax.

    But the solution did something different.

    It took the difference between the accum. Depreciation for the two years and still added the depreciation on an asset disposed that year.

    April 19, 2021 at 3:03 pm #618223
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    The solution is correct.

    When an asset is disposed of then accumulated depreciation on the asset sold is removed from the balance brought forward on the accumulated depreciation account.

    Therefore the depreciation expense for the year is the difference between the closing balance on the accumulated depreciation account and (the opening balance less the depreciation on the asset sold).

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