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Depreciation Question Exam Kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Depreciation Question Exam Kit

  • This topic has 2 replies, 2 voices, and was last updated 10 months ago by claudiabrunharo.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • March 11, 2022 at 8:14 pm #651084
    claudiabrunharo
    Member
    • Topics: 2
    • Replies: 6
    • ☆

    Hi!
    Could you help me please?

    In the question:
    Question N3 Exam Kit FR 2021/2022
    An entity purchased property for $6 million on 1 July 20×3. The land element of the purchase was $1 million. The expected life of the building was 50 years and its residual value nil. On 30 June 20×5 the property was revalued to $7 million, of which the land element was $1.24 million and the building $5.76 million. On 30 June 20×7, property was sold for $6.8 million.

    That is the context of the question and I don’t need the answer. What is confusing me are the dates.

    1 July 20×3 purchase and June 20×5 revaluation.

    Even if I have a revaluation in the end of the period [I think the period is Jul-Jun or am I wrong? Correct me please] do I have to charge first the depreciation and then revaluate?

    In this case should I charge depreciation
    Julx3 – Junx4
    Julx4-Julx5

    After compute the CA and depreciation from the 2 year do I revaluate ?

    Thank you for your help
    KR
    Claudia

    March 12, 2022 at 8:58 am #651136
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6443
    • ☆☆☆☆☆

    Hi,

    Yes, you need to charge depreciation up to the date the asset is revalued. Here you would therefore depreciate up to 30 June X5.

    Following this revaluation the asset’s revalued amount is then depreciated over its remaining useful life.

    Thanks

    March 13, 2022 at 7:58 pm #651231
    claudiabrunharo
    Member
    • Topics: 2
    • Replies: 6
    • ☆

    Thank you very much for your time!

    KR
    Claudia

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