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Dear sir
today I saw examiners report of sept 2017
Example 2 in that parent acquired subsidiary 2 years ago and the depreciation that is charged to the asset should be multiplied by 2 times right sir ??? But in the answer while they calculated for cost of the sale they have not multiplied to 2 they have just considered the same acquired years depreciation
M confusedCost of sales is an item on the statement of profit or loss
The statement of profit or loss reflects an entity’s activities for (in this example) the YEAR ended 30 April, 20X6
How much depreciation should be charged THIS YEAR on that fair value adjustment of $80,000?
OK?
Let me ask you the next question that is not in that example Paprika …
… by how much should the consolidated TNCA be increased on the statement of financial position as at 30 April, 20X6 with reference to that machinery that was bought 2 years ago?
No because I still think it has to be 20000 (10000*2) because it was acquired 2 years ago
That was the point of my question in my original answer!
“How much depreciation should be charged THIS YEAR on that fair value adjustment of $80,000?”
How much depreciation should be charged EACH SINGLE YEAR on that fair value increase of $80,000? You know (because you’ve told me) that $10,000 should be charged EACH SINGLE YEAR
And a statement of profit or loss is a statement of an entity’s activities FOR A SINGLE YEAR
So let me ask again … “How much depreciation should be charged THIS YEAR on that fair value adjustment of $80,000?”
The question asks you for the Cost of Sales figure and (again as I said in my original post) “Cost of Sales is an item on the statement of profit or loss”
That means that the line item Cost of Sales represents the cost of the sales made by the entity FOR A SINGLE YEAR
Is that getting any clearer now?
Thank u so much sir now I understood and sorry for troubling you asking same again
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