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Hello Mike
I hope you can help me with this question >.<
Page 193 Question 2
I simply can’t understand how the depreciation for the year was 8k in S and 9k in H as shown in the answer.However, I have divided the Carrying value 60k and transfer value 65k by the remaining useful life which is 5years (60/5=12 and 65/5= 13)
60-12=48
65-13=52
difference is 4 same as in the answer but depreciation of the year is not the same.Also, Sir you taught us the other method which is the dif between transfer price and carrying value / remaining useful life of assets which in this case for some reason it doesn’t add up for me.
Sorry for the long question xD.
You have failed to take into account the estimated residual values!
Estimated remaining useful life is still 5 years but residual value estimate has changed. It was worth 60 in S at the date of transfer with a revised estimated residual value of 20. That means there is only 40 to write off over 5 years = 8 per year.
On transfer, 45 (65 – 20) is to be written off over 5 years = 9 per year
But surely this is clear enough in the answer on page 210
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