IAS 16

For the above qn, the 5000 can be capitalized right. So i took the carrying amount at 1 october 20x7 12500 +5000 = 17500 Therefore depreciation = 17500 x 25% = 4375

But the answer key states that the answer is 8750

"over the machine’s remaining life" A machine has a 4 year life After 2 years it is improved How many more years remaining life does it have now?

2 years left. Okay i managed to get the correct answer already. Thank you so much!

Sorry. But i just realised, we only depreciate the total capitalised cost of 17500 from 1 october 20X7 to 30 september 20x8. Thats only 1 year of depreciation. And we are not told what is the useful life of the machine. Then why is the answer $8750 ?

Qn) The liverpool company acquired a drilling machine on 1 october 20X5 at a cost of $25000 and depreciated it at 25% per annum on a straight line basis. I believe, above makes it 4 year useful life. Isn't it?

Anuja, "from 1 october 20X7 to 30 september 20×8. Thats only 1 year of depreciation." Yes, but when the machine was purchased on 1 October, 20X7, it had a 4 year estimated useful life which means that it would be fully depreciated over 4 years at 25% straight line You yourself have worked out that two years have already passed when the upgrade was carried out and there must have been 2 years of estimated useful life still remaining at that time vishalsharma1981 - if you wish to answer students' questions, may I suggest you start your own website and refrain from rudely answering questions that are specifically addressed to me? Thanks

Sir, If the excess depreciation on revalued amount is transfered to retained earnings from revaluation reserves How about if the revalued amount is less than cost of asset And that means depreciation now charged will be less than previously charged Do we have to make any adjustments for the same?

Yes, it's called an impairment and the decrease in value is either debited to revaluation reserve, where the asset has been previously revalued, or it's debited to statement of profit or loss Is there any adjustment to the depreciation? No. that was correctly calculated as at the time it was calculated. The depreciation from the date of impairment onwards will still be calculated to write off this newly impaired asset over its estimated remaining useful life OK?

Thank you so much?

You're welcome?