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Mini Exercises

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Mini Exercises

  • This topic has 7 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • December 1, 2015 at 7:44 am #286636
    samh
    Member
    • Topics: 15
    • Replies: 42
    • ☆☆

    Sir, this question is from mini exercises.

    During the year S sold PPE to H for $65,000.
    cost of PPE: $100,000 ,4 yrs ago and it’s useful life of 9 yrs.
    Estimated scrap proceeds of $10,000 were revised on transfer to H to $20,000.
    Straight line basis for depreciation with a full year’s charge in the year of purchase and none in the year of sale.

    How do I deal with the scrap proceeds?:)

    December 1, 2015 at 9:28 am #286659
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    Deduct from carrying value to determine how much of the carrying value needs to be depreciated over the revised estimated useful life

    At date of transfer it had a carrying value of $60,000

    Sold for $65,000

    Scrap value now $20,000

    So $45,000 to depreciate

    Estimated useful life 5 years

    So depreciation now $9,000 per annum

    That compares with $10,000 per annul before the transfer.

    Pup to be eliminated: $5,000 on the transfer less $1,000 depreciation

    If it hadn’t been transferred, carrying value would have been $52,000 (60 – depreciation on 60 – 20)

    After transfer carrying value is $56,000 (65 – depreciation on 65 -20)

    Ok?

    December 1, 2015 at 1:28 pm #286714
    samh
    Member
    • Topics: 15
    • Replies: 42
    • ☆☆

    so, scrap value should be deducted from both 60 and 65.

    and

    when I do the CSofFP, I can just calculate pup in this way:
    5,000/5

    (1,000)
    _______

    4,000

    right? ‘cuz it’s what you are suggesting in the lecture.:)

    Sir, Can I really really write down the same abbreviations as in your lecture?like ret ears/pup/rev/pat..etc, because I am only using opentuition.com and BPP revision kit to help with my exam, I need to be 100% sure:) Thank you!!!

    December 1, 2015 at 1:40 pm #286719
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    100% certain – abbreviate in the numbers answers (but, if you have to write to someone like in a report or a letter, don’t abbreviate there)

    Yes, we need to deduct the scrap estimate from both the 60 and the 65

    December 2, 2015 at 5:38 am #286871
    samh
    Member
    • Topics: 15
    • Replies: 42
    • ☆☆

    thank you! sir

    December 2, 2015 at 8:51 am #286915
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    You’re welcome

    December 3, 2015 at 12:43 am #287104
    samh
    Member
    • Topics: 15
    • Replies: 42
    • ☆☆

    sir, can I write this down in my answer paper?

    PUP:
    5,000/5

    (1,000)
    _______

    4,000

    or I need to calculate it in details?

    December 3, 2015 at 8:28 am #287162
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    What you’ve written is fine.

    Maybe safer to write:

    Profit 5,000
    Depn (1,000)
    Pup 4,000

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