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Hallo,
1. I have an example which I don’t quite understand for non-current assets. It says:
Original cost 80000
Plant sold 49000
Written down value 37000Q1: what is the meaning of written down value, if the plant is sold, why do we have a written down value?
2. The example continues, finding the accumulated depreciation. It says:
Disposals = 80000 – 37000
Q2: is the written down value further connected or used for finding depreciation as I don’t see connection between the two.
Thank you!
The written down value (or carrying value) is the value that appears on the Statement of financial position (i.e. cost less accumulated depreciation).
Certainly, if it has been sold then it will no longer appear on the Statement, but we need to know the written down value in order to calculate the profit or loss on sale.
Here, we had a value for the plant of 37,000 and we sold it for 49,000, so we made a profit on sale of the difference of 12,000.
Since written down value = cost – accumulated depreciation, then we can work it out if we know the written down value and the cost.
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