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CHMURA CO (DEC 13)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › CHMURA CO (DEC 13)

  • This topic has 1 reply, 2 voices, and was last updated 7 months ago by John Moffat.
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  • Author
    Posts
  • June 11, 2022 at 4:02 am #658422
    Frooti
    Participant
    • Topics: 80
    • Replies: 75
    • ☆☆

    Mehgam’s currency, the Peso (MP), is currently trading at MP72 per $1. Setting up the
    manufacturing base in Mehgam will require an initial investment of MP2,500 million
    immediately, to cover the cost of land and buildings (MP1,250 million) and machinery
    (MP1,250 million). Tax allowable depreciation is available on the machinery at an annual
    rate of 10% on cost on a straight?line basis. A balancing adjustment will be required at the
    end of year five, when it is expected that the machinery will be sold for MP500 million
    (after inflation). The market value of the land and buildings in five years’ time is estimated
    to be 80% of the current value. These amounts are inclusive of any tax impact.

    Please explain meaning of last line and its implication.

    June 11, 2022 at 8:19 am #658446
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51562
    • ☆☆☆☆☆

    You can find lectures working through the whole of this question (including explanation of this point) on this page:
    https://opentuition.com/acca/afm/afm-revision-lectures/

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