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vasiamacri.
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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Exam preparation question – Non- current assets under Chaper 7. Impairments
Dear tutor,
I am struggling with this question as the answer to equity amount is different from what I understand.
(b) Adjustments to retained earnings $’000
Draft retained earnings 7,350
Profit on disposal
(=$2,500,000 – ($4,000,000 – $2,000,000)) 500
Depreciation – factories -3,260
Depreciation – office building -625
Impairment -2,875
Depreciation – office building -700
390
The depreciation charge on the revalued asset will be different to the depreciation that would have been charged based on the historical cost of the asset. As a result of this, IAS 16 permits a transfer to be made of an amount equal to ‘the excess depreciation’ from the revaluation surplus to retained earnings.
But the above workings just transferred all the depreciations charged for both building and factories.
How may I understand the workings that concluded in $390 of equity value?
Hi,
Yes, that is a good point. Technically you could include the reserve transfer, which would add to the retained earnings figure.
Thanks
Please am struggling with this question cam you please tell me what steps to work it?
Hi,
What is it that you are struggling with exactly? If you let me know then I can help you.
Thanks
The retain earning adjustment part how do we workout the depreciation. I saw the comment from Jean i do not know how to work figures on depreciation and amortization.
Hello,
Could someone explain to me how the figure 390 of retained earnings was calculated?
Thanks in advance