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hello sir. Just started final revision on F7 and F5 and found some tricky moments in P/R kit. PLease sir, help:
1)Carter vacated an office building and let it out to a third party on 30 June 20×8. The building had an original cost of $900 000 on 1 Jan 20×0 and was being depreciated over 50 years. It was judged to have a fair value on 30 June 20×8 of $950 000. At the year end date of 31 Dec 20×8 the fair value of the building was estimated at $1.2 million.
Carter uses the fair value for investment property.
what amount will be shown in Rev surplus at 31 Dec 20×8 in respect of the building.I Answered correctly, but I dont know why the info about 1.2mln is ignored…
It is written in answers: ” INCREASE OF (1200-950) = $250 000 ARISING BETWEEN 30.6.X8 AND 31.12.X8 WILL BE CREDITED TO P+L IN ACCORDANCE WITH IAS 40.”not comprehensive at all(
2) Intangible assets are not ammortised while they were capitalised but not finished. is that right? and the amount capitalised is costs incured starting from the date of capitalisation till the finishing date? Right?
1) What it’s saying is that the extra 250 increase since reclassification shouldn’t be credited to revaluation reserve but should instead be taken to profit or loss
2) Yes, yes
Thank you sir, got it. Having big problems with taxation. Is current tax treated like expense (Dr acc) and deferred tax like liability (Cr acc)?!
Could you explain further one pls:
3) BPP P/R kit page 65 (5th)OPENING INCOME TAX ASSET 50
OPENING DEFERRED TAX 30
CLOSING DEFERRED TAX 50
INCOME TAX PAYABLE AT THE Y/E 150*P/L INCOME TAX CHARGE IS 160 000
WHAT AMOUNT OF INCOME TAX HAS BEEN RECEIVED OR PAID DURING THE YEAR?
Answer:
I did like P/L expenses T-account:
B/f tax asset 50 | b/f deferred 30
charge 160 | payable 150
C/f Def 50 | RECEIVED 80what i did wrong sir in T-account? in P/R kit bpp they show only calculations without dr and cr but for me its fundamental.
Thank you very much!!!Current tax, debits:
50 brought forward, 150 carried forward, 20 transfer from deferred taxCredits: 160 income statement, missing figure (cash received) 60
Deferred tax debits:
50 carried forwardCredits: 30 brought forward, missing figure transferred to current tax 20
900,000
(153,000) (900,000*8.5/50)
747000
203,000 (OCI Revaulation gain)
950, 000
250,000. (Fair value gain income)
1.2m
The answer should be $203,000Thanks for this – but has anyone ever said any different?
Certainly neither Rustam nor I has said anything other than $203,000 balance in the Revaluation Reserve
The $250,000 that Rustam was asking about was the increase since re-classification as an investment property and that $250,000 was credited to statement of profit or loss rather than to either of statement of comprehensive income or revaluation reserve
But it’s good to see that you have arrived at the correct figure of $203,000 balance in the Revaluation Reserve
OK?
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