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1. A business purchased an asset on 1 Jan 2011 at a cost of $160,000. The asset had an expected life of 8 years and a residual value of $40,000. The straight line method is used to measure depreciation. The financial year ends on 31 Dec
At 31 December 2013, the estimated remaining life of the asset from that date is now expected to be only 3 more years and the residual value is unchanged.What will be the NBV st 31 Dec 2013 in the SFP?
Answer is $107,000-I do have obtained the CV at 1 jan 2013 which is $130,000, however I am having some difficulty to tackle the question. Could you please help?
2.At 30 June 2012, P had the following balances
Trade receivables is $31,450 less allowance on receivables(as at 1 Jan 2011) $450=$31,000
Bad debt=$1,000
Specific allowance=60% of $800
General allowance=10%What was the allowance for receivables in her SFP as at 30 June 2012?
In the BPP book, the workings start with net receivable(31,000+450)=31,450
-Why the net receivable is 31,450 and not 31,000?Thanks.
1. The answer is not 107,000 – either BPP have a typing mistake or you have copied it wrongly.
As from 1 Jan 2013 the remaining life is 4 years, so the depreciation is (130.000 – 40,000)/4 = 22,500
So the carrying value ta 31 Dec 2013 = 130,000 – 22,500 = 107,5002. The allowance for receivables at the end of the year is always calculated on the balance on the receivables account at the end of the year which is 31,450.
1.”As from 1 Jan 2013 the remaining life is 4 years”. How did you get 4 years of remaining life?
2. C sells good at a margin of 50%. During the year to 31 March 2013, the business made purchases totalling $134,025 and sales of $240,000. Inventories in hand at 31 March 2013, valued at cost, was $11,385 higher than the corresponding figure at 1 April 2012
What was the cost of goods that C had drawn out?
Answer is $2,640-How to obtain the answer. Workings in the BPP book are a bit confusing
1. Because it says there are 3 years from 31 Dec 2013.
2. I really cannot keep rewriting BPP’s workings for you – I really don’t see why you are finding them confusing.
The cost of the goods used is the purchases less the increase in inventories.
The cost of the goods sold is 50% x the sales.So the cost of the drawings is the difference between the two.
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