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Exam preparation question – Non- current assets under Chaper 7. Impairments

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Exam preparation question – Non- current assets under Chaper 7. Impairments

  • This topic has 5 replies, 4 voices, and was last updated 3 months ago by vasiamacri.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • February 20, 2022 at 1:57 pm #648981
    Jean
    • Topics: 1
    • Replies: 0
    • ☆

    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?

    February 24, 2022 at 9:00 am #649239
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Hi,

    Yes, that is a good point. Technically you could include the reserve transfer, which would add to the retained earnings figure.

    Thanks

    March 1, 2022 at 10:04 am #649544
    Kemi.A
    • Topics: 0
    • Replies: 2
    • ☆

    Please am struggling with this question cam you please tell me what steps to work it?

    March 3, 2022 at 7:22 pm #649759
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Hi,

    What is it that you are struggling with exactly? If you let me know then I can help you.

    Thanks

    March 6, 2022 at 3:24 pm #649982
    Kemi.A
    • Topics: 0
    • Replies: 2
    • ☆

    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.

    March 15, 2022 at 9:43 pm #651338
    vasiamacri
    • Topics: 0
    • Replies: 1
    • ☆

    Hello,

    Could someone explain to me how the figure 390 of retained earnings was calculated?

    Thanks in advance

  • Author
    Posts
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