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at 30th september 20×2, plant and equipment
cost 860000
accumulated depri 397000
during year end 30 sep 20×3, plant had a wdv of 37000 and sold for 49000. plant had original cost of 80000. plant purchased during the year was at the cost 180000. it is lambda co’s policy to charge full year depri using the rate of 10% on straight line basis.
what was the carrying amt in lambda co’s book as on 30 sep 20×3 for plant and equipmnt?can you please explain the solution for this?
Although you have not written this, I assume the question says that there is no depreciation charge in the year of sale.
In which case, the depreciation is charged on the cost of assets not sold during the year, which is 860,000 – 80,000 = 780,000, and on the new assets purchased during the year of 180,000.
Therefore the depreciation is 10% x 960,000 = 96,000.Therefore the carrying amount at the end of the year is the cost of 960,000 less the accumulated depreciation which is 397,000 – (80,000 – 37,000) + 96,000 = 450,000.
Please watch my free lectures on non-current assets. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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