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Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › Case study Rod (nr. 37 revision kit)
I’m going through the revision kit and got stuck with case study Rod nr. 37.
The problem arises as the subsidiary purchased equipment for 50 mil and got a trade discount of 6 mil during the year beginning 01.12.X0. This discount was taken to P&L, it’s all clear to me. Another info is depreciation is charged on a straight line basis over six year.
The question is about the cons. SoFP of the year ending 30.11.X3 (meaning 3 years from the event above).
But the solution to this question states that a trade discount less depreciation = 6 x 5/6 = 5 mil should be deducted from the retained earning of that subsidy.
Can anyone pls. explain to me why 5 over 6 years? shouldn’t it be 3/6 or am I misunderstanding sth here. Bunch of thanks for the reply.
I don’t have kit or past papers with me at the moment, as far as I remember they should have recorded it by 44 excluding trade discount (50-6=44) its straight line depr and i think 1 year has passed, hence taken 1 year depreciation.