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Dear Mike,
I don’t understand the question 19 in the December 2014 MCQs.Total charge to P/L
I am ok with: 18000*9/12 = 13500
I am ok with: (340000-90000)*10% = 25000But I understand this one: 340000 / 5 years = 68000 .
Why should I charge this amount to P/L?And then, may be I am mixing different issues, but when I calculate like this, just to check the total calculation for this transaction:
Value of plant less 1st installment: 250000
10% interest 25000
2nd installment (90000)
Amount outstanding 275000
3rd installment (90000)
….
and so forth, I don’t manage to get the total of $ 450000 (5 equal installments of 90000). Why?Depreciation?
In real life, it would come right. But this question is not asking you for the five year profile – it just wants to know the expense to the profit or loss account for the year.
In the exam room don’t profile it through to the end and then start worrying about why it doesn’t come right. That would achieve two bad points – 1) you start worrying about it (and that’s not a good thing to start in the middle of an exam) and 2) you’re wasting valuable time arriving at a solution that is then going to start you worrying!
Thank you!
Depreciation! I see now.
In the exam, the problem is that I’m not 100% sure of what I am doing and I’m always to trying to double check. Indeed, I am wasting a lot of time…
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