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Hey sir,
The above question is from BPP revision kit
For extra depreciation charged they have calculated it :
12,000*3/4= 9,000
I mean I dont understand why have they done 3/4 here?2) I dont understand while calculating the investment in associates we have only considered Comic Co and not Hardy co, why is that the case?
Hi,
The asset was bought on 1 Jan X5 and depreciated over six years. When the sub was acquired on 1 Jan X7, two years of the asset’s life had elapsed and there were only four left, so the new fair would now be depreciated over the remaining four years in the group accounts.
In the above they are looking at the carrying value of this asset at the reporting date, where one year has passed since the acquisition date, hence only three years remain. Therefore the remaining carrying value will be 3/4 of the fair value uplift.
Hardy is a subsidiary and not an associate so would not be part of the investment in associate.
Thanks
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