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Rose purchased plant for 20 million on 1 may 07 with estimated life of 6 yrs.residual value of 1.4 million .At 1 may 2010 the estimated residual value changed to 2.6 million .The change hasnot been taken to the financial statement of 30 april 2011?
Kindly solve this .Is it 2.7 depreciation and carrying value of 8 million as at 1 May, 2011?
yes as per the solution but i dont understand y
at 1may 2010 cost 20 -2.6=17.4
As the the 3yrs have passed away .Arent we going to depriciate from remaining 3 yrs.
depriciation.17.4/3=5.820 depreciated at 3.1 per annum gives a net book value of 10.7
Realisable value changes to 2.6 leaving 8.1 to be depreciated over the remaining 3 years at 2.7 per annum
And 10.7 – 2.7 gives a net book value of 8 at the end of the fourth year
OK?
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