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A Building whose costs as at 1 October 2000 was $50million has a accumulated dep. as at 1 October 2008 of $8million . Depreciation method is straight line . Sir, how can I determine the number of years this building estimated life? Since it is not categorically stated on the FS trial balance . This is my major problem with depreciation and I scored 43% in F5 first attempt because of this.
However, this is just an extract from exam kit that says estimated life is 50years since it has Acc’ Dep of $8m as at 30 sept 2008 which is 8years after its acquisition .
How do they arrive at this 50yr ? Technically stressful to calculate .
Depreciation as at 1 October, 2008 is $8 and depreciation is straight line
On what date was the building acquired?
What date is it now (1 October, 2008!)?
How many years is it since the building was acquired?
Divide accumulated depreciation by the number of years since acquisition and what do you get?
If you haven’t arrived at the figure $1, go back and do the exercise again
Now, assuming that you have arrived at $8 accumulated depreciation and you have also arrived at 8 years, that tells us that the building is being depreciated at the rate of $1 each year
And the cost was $50
So how many years is it going to take us to depreciate that building completely?
And, if you only scored 43% in your first attempt at F5, why have you posted this on the F7 forum
And believe me on this … a shortfall of 7 marks is not because of an inability to calculate depreciation … it’s a deeper issue than that
OK?
Now I got this more excellent , similar question on brand on the kit . I can now close my eyes to get the no. Years … acquisition date was since 3 years with costs $30million and accumulated dep. after 3 years was $9million
To calculate d no. of years9/3 = $3
and cost was $30
Therefore no of years = $30/$3 = 10 yearsThank you so much sir!
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