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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Depreciation
Hi Sir,
From the FA Lectures, example 5 from Chapter 6 (Purpurs), the question does not state the useful life but says the there is no change in the remaining estimated useful life of the building. Does it mean that we should be calculating the useful life of the asset? Or there is a mistake in the question?
Thank You.
There is no mistake in the question.
When the buildings were originally purchased they had an expected life of 50 years (because the depreciation was at 2% straight line).
As at 31 December 2002 the accumulated depreciation was $1,080,000 and therefore the buildings must have been owned for 1,080,000 / (2% x 3,600,000) = 15 years.
Therefore the remaining life is 50 – 15 = 35 years.