Mini exercise no 5

The answer is written out for you on page 233 of the notes!

It's actually done in the old way. In your lectures you told another way to solve. Can you please do the solution in that way.

What I used to do was have the same two columns - in the first I would show the "history" of the asset from its original purchase date and its accumulated depreciation and carry on down in that column as though the asset had not been transferred, so I could work out this year's depreciation and the carrying value at the end of this year. In the right hand column I would show the transfer value and the depreciation since transfer and the actual carrying value Then I would compare depreciation this year with what it would have been if we hadn't transferred and compare carrying value at the end of this year with what it would have been if we hadn't transferred So now I know 1) profit on transfer 2) difference in depreciation charges and 3) difference in carrying values But I don't need all that - it's long winded and you can't always do it - you're not always given the history of the asset So, if I were you, I would get used to the way now shown in the notes. The reason why the other way is referred to as "the old way" is because it's no longer current! There's a quicker, easier way - the way shown in the notes

Or do you mean .... Profit on transfer / number of years remaining useful life? In this case it's $1,000 / 2.5 years = $400 per annum and there's just 6 months from date of transfer to accounting year end so the applicable depreciation figure is $200 OK?

yeah I was asking for the above second method. Got that thanks :)

sir one thing more I need to ask you is that in the same question we are crediting accumulated depreciation with $35000. Why?

Isn't that the charge for the remaining part of the year after revaluation, based on the revalued amount and the remaining useful life?

Ok!

You're welcome