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question no- 7.9
could you explain the answer , i dont understand why do we subtract 40000( plant held all year) and how on disposal 9 month arrived and my working so far
plant= 2000000×20/100= 40000
disposal = 40000×3/12 = 10000
and whats the financial year – 1 oct- 30 th sept right?You will have to sell me what question you are referring to by “7.9”. Although I assume that you are using one of the ACCA Approved Revision Kits, I have no idea at all as to which one 🙂
The financial year is indeed from 1 October X2 to 30 September X3.
From 1 October X2 to 1 April X3 (6 months) the plant was 200,000. Therefore the depreciation for this period is 6/12 x 20% x 200,000 = 20,000
On 1 April X3 they bought more plant for 50,000, so the total went up to 250,000. From 1 April X3 to 30 June X3 (3 months) the depreciation is therefore 3/12 x 20% x 250,000 = 12,500.
On 30 June X3 they sold plant with a cost of 40,000, so the total went down to 210,000. From 30 June X3 to 30 September X3 is 3 months, so the depreciation for this period is 3/12 x 20% x 210,000 = 10,500.
So the total depreciation is 20,000 + 12,500 + 10,500 = 43,000
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