Dear Mike,
In Q3, part d we are supposed to calculate impairment loss.
I had no problem with calculation of net book value of the building as at 30 Nov 2012, that is 3,800.
But I don't understand why do they depreciate the CURRENT replacement cost for the past 6 years.
the question already states that it is a current measurement. Why do we have to depreciate for past 6 years?
If I state my assumption on the exam, will I still lose a mark, how do you think?
Please, explain,
Thanks
Louisa
Ask the Tutor ACCA SBR
December 2012 - Blackcutt
12y ago#1When considering replacement cost, we need to consider a similar asset, similar age, similar condition, similar location.
Probably that's why we have to depreciate replacement cost by 6 years?
I don't have the question to hand so, if that's not the answer, let me know and I'll look it up from the ACCA website. At the moment I'm waiting for a different question from the ACCA website and, because of my dreadfully slow internet connection, I've already been waiting for over 30 minutes :-(
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