Cost Model

This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.

Viewing 2 posts - 1 through 2 (of 2 total)

Author

Posts
August 21, 2021 at 4:42 pm #632434
chelleyness
Participant
- Topics: 2
- Replies: 2
Hi. Referring to Q1 of March/June 2021 PYQ, how does the cost model affect retained earnings?

From the answer, “– Retained earnings would increase by $1,000,000 to $3,600,000.”

Could you please explain how does this come about? Thankyou!
August 29, 2021 at 10:55 am #633346
P2-D2
Keymaster
- Topics: 4
- Replies: 7235
Hi,

Under the cost model the property would not have been revalued to $30m and so the higher depreciation of $1m ($30m/30 years) would not have been charged. If it was not charged then the profits and therefore retained earnings ill both be higher.

Thanks
Author

Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.