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Hi sir ,
I didn’t understand how to get the answer for the thing of the month like 2/3 or 1/3 ,which months did you take ? I did watch all the free lectures but still didn’t understand.
Thank you sirHi sorry I forgot to mention about the question number.It’s actually question number 3 .Also in chapter 6 example 5 I try to work it out despite there is no lecture on it but how do we know tht its useful life is 50 years.I know that the 50 years is obtained by dividing 1116000 / 22320 but how do we obtained 72000
The invoice received in March 2006 was for December 2005, January 2006, and February 2006 (3 months) . Only January and February are part of the year to 31 December 2006 and therefore only 2/3 of the expense is in our period.
The invoice received in March 2007 is for the three months to 28 February 2007. Only December 2006 is in our period and therefore only 1/3 of the expense is relevant.With regard to the depreciation example, the depreciation rate was 2% straight line. 2% of $3,600,000 is $72,000.
(and there is a lecture working through this example. I say at the end of my Chapter 6 lectures that I will work through it when we come to the chapter on limited companies, and I do 🙂 )
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