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PROPERTY,PLANT AND EQUIPMENT 2

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › PROPERTY,PLANT AND EQUIPMENT 2

  • This topic has 0 replies, 1 voice, and was last updated 4 days ago by Eunice03.
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  • August 5, 2022 at 10:03 pm #662529
    Eunice03
    • Topics: 41
    • Replies: 35
    • ☆☆

    An entity revalued its land and buildings at the start of the year to
    $60 million ($15 million for the land). The property cost $30 million ($6
    million for the land) ten years prior to the revaluation. The total
    expected useful life of 40 years remained unchanged. The entity’s
    policy is to make an annual transfer of realised amounts to retained
    earnings.
    Show the effects of the above on the financial statements for the
    year.

    ANS
    (W1)
    Land Buildings Total
    Cost 6,000 24,000 30,000
    Depreciation (10/40) (6,000) (6,000)
    –––––– –––––– ––––––
    Carrying amount 6,000 18,000 24,000

    Good day,Please can you explain why the depreciation for building was calculated as 10/40 and not 1/40 as they give different answers. Thank you

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