IAS 16 depreciation — OpenTuition Forums

DDivyasri5y ago

Hi Tutor, Question 3 form chapter 5 of open tuition material: PPE bought on 1 Jan 2012 for 25 million Useful life - 10 yrs On Dec 2014 remaining life was estimated as 5 years. Ans:SFP- 14000 and SPL- 3500 Excess depreciation- 2500( calculated using previous fig) (3500) ----------- 1000- will this amount be deducted from retained earnings and 2500 will be charged to SPl, or entire amount will be charged to (3500) SPL Thanks

P2-D2Tutor5y ago#1

Hi, The 3,500 is charged in full through profit or loss. The 1,000 is a reserve transfer through the statement of changes in equity that will reduce the retained earnings. Thanks

DDivyasri5y ago#2

Thanks for your reply tutor, Dr Depreciation. 3500 Cr Accumulated depreciation (SPL) 3500 Dr Revaluation reserve 1000 Cr Retained earnings. 1000 Is this entry right? Also in open tuition material answer , in SFP only PPE - 14000 is shown Should we also mention Retained earnings- 1000(in SFP)

P2-D2Tutor5y ago#3

You're welcome. Yes, your double entries are correct, however I'd not show the figure you state in the SFP extract. There is too much happening in retained earnings to show the figure.

DDivyasri5y ago#4

Thank you tutor

P2-D2Tutor5y ago#5

You're welcome

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