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Hi Sir,
Take Ch9 comprehensive example as a sample to ask,Note 2: Danute sold PPE to Ausra, transfer of gain recognized by Danute is 36,000 and excess of depreciation is ( 36,000 / 4) 9,000 which is expensed in Ausra.
So I would like to know why a net of provision of unrealized gain ( 36,000 – 9,000 ) 27,000 is deducted in Danute’s book.
I know in the note there is saying the unrealized gain is deducted in selling entity, but I would like to further know why.
Thanks!!
KoeyThe 36,000 is an unrealised profit when it was first recorded by Danute on the date of sale / transfer
But, at the end of 4 years and that asset has been fully used up, is that 36,000 still unrealised?
Or was that 36,000 realised over the 4 year remaining useful life of that item of plant?
In other words, as each year passes, the 36,000 gets realised. So, at the end of the year in which the transfer was recorded and the profit recognised, one quarter of that profit is realised and only three quarters remains unrealised
Similarly, at the end of the second year, half of the profit is realised and there still remains half unrealised
Does that explain it for you?
In future, if you want a guarantee that I shall respond, please post your questions on Ask ACCA Tutor page – I rarely look at the general forums
Dear Sirs,
Refer to the above example,
There is finance charge 1,750 expenses and 31,750 still accrued. However why adding this two amount together not equal to 36,300?
Thanks!
Sorry, please ignore my above question,
What I wanna ask is how to calculate the deferred cash (30+3-1.25).
Thanks!
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