Overhaul costs Paper F7 Question

Bbabykim11y ago

Hi A question asks for annual deprn charge for years 1-5yrs and years 6-10. the cost os the asset is 25mil of which 5mil of this figure is estimated for overhaul costs . I understand the workings for the first 5 yrs , however why did they increase the 5mil overhaul cost to 6mil before doing the deprn calculation ???? For ease of reference this question is on pg 29 eg# 4 of the kaplan text... I ll appreciate some clarification #confused thanks :) response can be sent to this address sedanscott21@gmail.com

MikeLittleTutor11y ago#1

I don't have the Kaplan kit nor text available! However, I have been asked this question before at a time when I did have the text to hand. I seem to remember that within the question there is mention of an increase in the overhaul cost for 5m to 6m Maybe you'll check the question again to see that you haven't missed a crucial bit of information If that doesn't answer it, let me know and I'll see if I can't find another way of helping you