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Dear Mike,
I have a question regarding the Mini Excercises, Chapter 5 Excess depreciation, Question 2. How do you I get to the 8,000 and the 9,000 please?
Thank you in advance.
Kind regards,
SandraThe carrying value at date of transfer was $60,000 and it was transferred at a value of $65,000
Disposal proceeds had been estimated at $10,000 but at date of transfer this was revised to $20,000
The estimated remaining useful life as at date of transfer was 5 years
IF the transfer had not taken place, S would have charged depreciation on ($60,000 – $20,000) / 5 = $8,000
But it DID take place and P will charge depreciation on ($65,000 – $20,000) / 5 = $9,000
OK?
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