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Chapter 5 Ias16 Practise question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Chapter 5 Ias16 Practise question

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by Asif110.
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  • Author
    Posts
  • August 1, 2022 at 12:47 pm #662277
    Asif110
    Participant
    • Topics: 70
    • Replies: 123
    • ☆☆

    Greetings.

    Regarding Zeus Co. The year end is 30 June. Machinery purchase 1st Jan 2013 and time apportioned according in year of purchase and disposal. I understand why you time apportioned 1st Jul – 31 Dec 2013 -> because it falls in 2013, even though machinery was purchased between 1st Jul 2012 -30Jun 2013 accounting period. But I don’t understand why did you then go and time apportion the second year as well : 2014 ? The answer should have been 27,000 and not 17,000.

    If you say the reason is because the accounting period falls in the 12months from 1st Jul 2013 as the reporting date is 30 Jun, then I would put forward that the purchase was done in the previous accounting period 1st Jul 2012-30 Jun 2013, and so this is the second year where time apportionment should not exist. If you say it is year based. Then as I show you – why time apportion for the second year 2014 ? Its only at the year of purchase and disposal. Nor was the machinery disposed of in 2014.

    Awaiting your reply,

    Thankyou sir.

    August 4, 2022 at 1:38 pm #662453
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6706
    • ☆☆☆☆☆

    Hi,

    I’ve not got the question to hand but from what I can make out from your query then the depreciation would be as follows:

    1 Jan 2013 to 30 June 2013 – 6 months
    1 July 2013 to 30 June 2014 – 12 months (full year)

    Thangs would only change if the asset was disposed of in that second 12 month period. If it was then we would pro-rate again for the number of months.

    Thanks

    August 4, 2022 at 10:47 pm #662483
    Asif110
    Participant
    • Topics: 70
    • Replies: 123
    • ☆☆

    Thats what Im saying. Its just you explained otherwise in the Practice question test on this website for Chpt5 IAS16. You can refer to double check. Perhaps it was a mistake needing correction, or you can explain to me my fault.

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