- This topic has 1 reply, 2 voices, and was last updated 1 month ago by
John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
ACCA Webinars: How to earn marks in Strategic Professional Exams. Learn more >>
20% off BPP Books for ACCA & CIMA exams - Get BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Pro-rata depreciation
Gandalf bought a teleportation machine for $80000 in January 20X1. The machine had an expected useful life of six years and an expected residual value of $20000. The machine was depreciated on the straight-line basis. At the end of December 20X4, the machine was sold for $30000. Gandalf charges pro rata depreciation. The total amount charged to the statement of profit or loss over the life of the machine was:
A. $50000
B. $30000
C. $60000
D. $40000
My answer was D with straight line depreciation, but the correct one was A. $50000. Must have something to do with pro-rata
It isn’t to do with pro-rata depreciation.
They will charge depreciation each year but then on sale there will be a profit or loss on sale (and both the depreciation and the profit or loss on sales will go to the SOPL.
So the total that will be charged to the SOPL over the period will be the difference between the original cost of 80,000 and the sales proceeds of 30,000.