• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Chapter 7 Exam Preparation Question (Impairment)

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Chapter 7 Exam Preparation Question (Impairment)

  • This topic has 3 replies, 4 voices, and was last updated 8 months ago by francihco.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 26, 2021 at 2:43 pm #626389
    radhika1
    • Topics: 1
    • Replies: 0
    • ☆

    Hello,

    This question is from the OpenTuition lecture notes:

    I have a question on how the depreciation was calculated for Shea Co on the office building after impairment. The value after impairment is $14m and I calculated depreciation to be:
    = $14m/10 years remaining useful life*(6/12) = $700k

    But the answer is showing $500k depreciation. I was just wondering how this was calculated?

    Many thanks in advance!

    October 3, 2021 at 4:45 pm #636929
    losercase
    • Topics: 20
    • Replies: 37
    • ☆☆

    HI, could you please reply tp this. even I had the same question

    October 4, 2021 at 11:59 am #636963
    f6ali
    Moderator
    • Topics: 10
    • Replies: 342
    • ☆☆☆

    I would suggest either don’t attempt the question, or if you do attempt it, do it without looking at the answer. The answer provided in the notes is incorrect.

    I have found following inconsistencies in the answer:

    1. The example specifies use of 10% reducing balance method for depreciating factories, but the answer applies Straight Line depreciation using 20 years useful life.

    2. If 10% reducing balance method is used, there’d be no impairment at all!

    3. The depreciation charge of $500k arises because it is assumed that the remaining life after impairment is 14 years, which doesn’t take into account the revision of useful life. Even then the figure is incorrect as 14 years will be the useful life on 1 January 20X8, which is before impairment.

    The notes will be updated in due time with correction. Thank you for pointing out the mistake.

    October 25, 2021 at 6:15 am #639031
    francihco
    • Topics: 8
    • Replies: 11
    • ☆

    Thanks for this thread. Were the notes updated after all?

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • nojwwnolife on The nature and structure of organisations – ACCA Paper BT
  • John Moffat on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • ben920331 on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Viktoriia.Yanchuk on The Statement of Financial Position and Income Statement (part d)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy