Hello Mr. John, thanks for your help as always
I learned that if I buy non-current assts (vehicle for example),
(DR) vehicle
(CR) cash at bank
However, in BPP exam kit (Depreciation),
when I purchased some plant for $38.000,
(DR) PPE $38.000
(CR) plant repairs $38.000
I thought this is (DR) plant (CR) cash at bank.
Could I ask what is "plant repairs A/C" and why is "$38.000"?
cf) BPP exam kit chapter 8, question 3
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F3 (PPE & Depreciation)
9y ago#1They should have Dr Plant Cr Cash
However the question says that what they had done was Dr Repairs Cr Cash
Repairs is an expense which apprears in the SOPL, and so the entry should not have been to repairs but to Plant (which appears in the SOFP.
So to correct their mistake we need to Dr Plant and Cr Repairs.
(Although the rest of the question relates to depreciation, this bit of it relates to Adjustments to Profit, which is dealt with in Chapter 17 of our free lecture notes and the lectures that go with it.)
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