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Non current asset

Forums › FIA Forums › FA2 Maintaining Financial Records Forums › Non current asset

  • This topic has 6 replies, 4 voices, and was last updated 10 months ago by Ken Garrett.
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  • September 2, 2017 at 9:43 pm #405070
    dilawarkhandk

    Question. ((Do we capitalise the cost of long leasehold property))
    If no, then how we can charge depreciation of restaurant that hold a 25 year lease.? This is an example mention in F3 but I studied in FA1 that rent of long leasehold property is revenue expenditure then how it’s capitalised here???
    Thanks

    September 3, 2017 at 5:24 pm #405219
    Ken Garrett
    Keymaster

    There can ve two elements to a lease:

    1 An up-front capital payment to acquire the lease. This is capitalised and amortised/depreciated over the life of the lease.

    2 Sometimes there is also a (usually) small ground rent to pay each year. This is an annual expense.

    September 4, 2017 at 12:21 pm #405325
    dilawarkhandk

    Thanks

    January 11, 2019 at 2:26 pm #500836
    Luqman

    The net book value of a company’s non-current assets was $200,000 at 1 August 20X2.During the year ended 31 July 20X3,the company sold fixed assets for $25,000 onwhich it made a loss of$5,000.
    The depreciation charge for the year was $20,000.What was the net book value of fixed assets at 31July 20X3?
    Can you answer this please.

    January 13, 2019 at 6:17 pm #501232
    Ken Garrett
    Keymaster

    Proceeds from sale = 25,000 and a loss of 5,000 was made, so the NBV of the assets sold must have been 30,000

    So, the closing NBV must be: 200,000 – 30,000 – 20,000 (charge for the year) = 150,000.

    January 7, 2020 at 6:30 pm #557082
    hamzasiddique

    What is accumulated depreciation?

    January 14, 2020 at 8:40 am #558580
    Ken Garrett
    Keymaster

    Accumulated depreciation for an asset is the total amount of depreciation that has been ‘clocked up’ by the asset so far.

    So, if an asset cost $12,000 and was being depreciated straight line at 25%, after three years the accumulated depreciation would be $9,000 (ie $3,000pa for three years).

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