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Plant and equipment at cost 85,000
Accumulated depreciation plant and equipment – 1 April 2014 19,000
Year end 31 March 2015
No depreciation has yet been charged on plant and equipment which should be charged to cost of sales on a straight-line basis over a five-year life (including leased plant). No plant is more than four years old.I have a question regarding this adjustment, normally to calculate depreciation, we would do 85000 – 19000 = 66000 and then 66000/5
but in this question is says 85000 – 19000 = 66000 and then the depreciation of 5 years is calculated on 85000 instead of 66000. why is that?Straight line basis? (Cost – residual value)/estimated useful life
Reducing balance basis? (Cost – accumulated depreciation) * ???%
This is an F3 matter!
And I don’t like the way that you say “Normally to calculate depreciation …” and then explain to me the reducing balance basis
It is MOST OFTEN the case that both straight-line AND reducing balance basis will appear within a single exam question so make sure that you read those questions extremely carefully
OK?
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