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why difference of depn before revaluation and after revaluation on assets are deducted in revaluation surplus..
do we adjust that depn amount in any other accounts?The difference between the two is subtracted from the revaluation reserve and added to the retained earnings. It it because that bit of the depreciation only occurred because of having revalued.
1..at 30 sep 2002
PPE cost 860000
accumulated depn 397000during the year ended 30 sep 2003, plant with written down value of 37000 was sold for 49000. this plant had originally cost 80000. plant purchased during the year 180000. It is the company policy to charge full depn in the year of acqn and none in the year of sale, using a rate 10% on straight line basis.
what is the carrying value at 30 sep 2003?2.
S bought a machine of 40000 in jan 2003. the machine had expected useful life of 6 yrs and residual value 10000. the machine was depreciated on the straight-line basis. At the end of dec 2004, the machine was sold for 15000.
what is the total amount charged in statement of profit or loss over the life of machine???Second Answer
Cost price of machine (Jan 2003) 40,000
Residual value 10,000
Useful life 6 years
Depreciation per year 5,000
(Cost-Residual Value)/Useful lifeSelling price (Dec 2004) 15,000
Net book value on date of sale (30,000)
(40,000-5,000-5,000)
Loss to be charged in SOCI (15,000)Treat the figures in this sequence Cost/Accumulated Depreciation/Net Book Value
Opening as at 1 October 2002 860,000 / 397,000 / 463,000
Disposals during the year (80,000) / (43,000) / (37,000)
Additions during the year 180,000 / 0 / 180,000
Depreciation for the year 0 / 96,000 / (96,000)
[(860,000-80,000)*10%+(180,000*10%)]Closing as at 30 September 2003 960,000 / 450,000 / 510,000
Rahul: Please do not answer in this forum – it is Ask the ACCA Tutor Forum, and you are not the tutor 🙂
(Your answer to the second question is not what the question asked for!)Archana:
Question 1: The cost at the end of the year is 860,000 – 80,000 + 180000 = 960,000.
So the depreciation is 10% x 960,000 = 96000.The carrying value at the start of the year was 860,000 – 397000 = 463,000. So the carrying value at the end of the year is 463,000 – 37,000 (sold) + 180,000 (bought) – 96,000 (depreciation) = 510,000
Question 2:
The total over the life of the machine is 40,000 (cost) – 15,000 (proceeds) = 25,000.
Hi Sir,
Can you answer this question?A company has a year end of 31 January each year.
They purchased a car for $12,000 on 1 January 2008 and sold it for $5000 on 31 March 2012.
Their depreciation policy is to charge 20% reducing balance, with a full years charge in the year of purchase and none in the year of sale.What was the profit or loss on the sale of the car?
2008 dep’n = 20% x 12000 = 2400. Carrying value = 12000 – 2400 = 9600
2009 dep’n = 20% x 9600 = 1920. Carrying value = 9600 – 1920 = 7680
2010 depn = 20% x 7680 = 1536. Carrying value = 7680 – 1536 = 6144
2011 dep.n = 20% x 6144 = 1228.8. Carrying value = 6144 – 1228.8 = 4915.2
Profit on sale = 5000 – 4915.2 = 84.80
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