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I have a question need help.
A business purchased an asset on 1 Jan 20X1 at a cost of $160,000. The asset had an expected life of 8years and a residual value of $40,000. Straight line method is used to measure depreciation. The financial year ends on 31 Dec.
At 31 Dec 20X3 the estimated remaining life of the asset from that date is now expected to be only 3 more years, but the residual value remains unchanged.
What will be the net book value of the asset as at 31 December 20X3, for inclusion in the statement of financial position?
The depreciation initially is (160000-40000) / 8 = 15,000 per year.
At at 31 Dec 20X3 there will have been 3 years depreciation (X1, X2, and X3) and therefore the carrying value will be 160,000 – (3 x 15,000) = 115,000.
the answer is different?It shows 160000-40000/8=15000*2years=30000
160000-30000=130000-40000/4 years=22500
130000-22500=107500if the asset has 8 years useful life and only two years used and three more years mentioned how it could be 4 years?if the question says at 31 december 20×3 how i can not include 31 2×03 december?really first time i see this kind of question and have never faced like that.How i can go back and change deprication if it is already calculate?
It is at 31 December X3 that the depreciation is being calculated, and so you use the information you have at 31 December X3. It would be silly to depreciate for X3 on the old basis when we know that the remaining life is different. So we calculate for X3 on the new basis – X3 plus the 3 more years, so 4 years in total.
it is like i know in advance it will change at 31 december 20×3 that is why i consider two years?
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