John,
Could you please explain the answer to question 7.9 in the BPP revision kit. This is my understanding:
Plant held all year (200,000-40,000) x 20% - Since its straight line depreciation, we subtract the disposal value of the asset and then depreciate.
Additions: 50,000 x 20% x 6/12 - This is obvious
Disposal: 40,000 x 20% x 6/12 - This confuses me, why are we depreciating the disposal?
Thanks!
Rachel
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Depreciation
10y ago#1We are depreciating the asset disposed of for the 6 months of the year that we owned it. The question says that it is proportional depreciation and so since we owned it for 6 months we need to charge depreciation for 6 months.
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