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sir in this question i don’t understand why when calculating the depreciation we take the value of NCAs as $100(the realisable value) instead of taking $110(book value). We should be taking $110 more because we will be running the parts division as going concern basis.
Isnt the rule of taking lower of cost and NRV applied only in case of inventory?
It has nothing to do with financial accounting rules.
A new company is being formed and the new company can take the opportunity to revalue the non-current assets if they want to. It makes sense to start the company using the realisable values rather than the existing book values – book values are always rather meaningless and never represent actual values.
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