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A business purchased an asset on 1 January 20X1 at a cost of $160,000. The asset had an expected life of eight years and residual value of $40,000. The straight line method is used to measure depreciation. The financial year ends on 31 December.
At 31 December 20X3 the estimated remaining life of the asset from that date is now expected to be more only three years, but the residual value is unchanged.
What will be the net book value of the asset as at 31 December 20X3 for inclusion in the statement of financial position.
A.$97,500
B.$100,000
C.$107,500
D. $115,000I think the answer is D: 115,000 but someone posted this qn claiming the answer from BPP to be C.
Sir Moffat at did it my way but later changed and stood firm.My question again, how is the Prospective application accounted for in the Current period as per IAS 8?
I’ve just explained this (and John also explained it to you)
For the year ended 31 December, 20X1 depreciation is 15
For the year ended 31 December, 20X2 depreciation is 15
For the year ended 31 December, 20X3 depreciation (given the revised estimate) is carrying value brought forward of (130 – residual value of 40) / 4 = 22.5
So net book value is 107.5
That’s in line with my previous explanation
OK?
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