june 2012

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September 20, 2017 at 7:13 am #408009
adarsh1997
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Hi John
I have some issues concerning a question in june 2012 Biscuits and cakes.
-In part (d), the revised net assets has been calculated by doing $23.2M + $2.12M= $25.32M
-My issues is that why depreciation has not been deducted from the net assets?
If we DR dep exp, then I presume we should CR Acc Dep, therefore reducing the value of the asset and hence the net asset.
September 20, 2017 at 8:15 am #408043
John Moffat
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It is because they have used the opening net assets on the basis that it is the net assets at the start that are earning the profit (which is what to assume in the exam unless told to do different).
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