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Hallo,
I have the following example and solution below:
$49,600 paid for an item of plant purchased on 1 April 20X8 had been debited to plant repairs account. The company depreciates its plant at 20% per annum on a straight line basis, with proportional depreciation in the year of purchase.
Required: write the correct entries.
Solution:Plant account 9,600
Plant repairs account 9,600Depreciation (income statement) 960
Plant depreciation account 960– could someone explain to me how do I come up with 960? If I buy in April this is 9 months, not 6, if we have to consider proportional depreciation. This example is present on the ACCA main website as part of a suspense a/c illustration and I am totally confused, including mentioning 49600 in the main text and 9600 in the solution as numbers.
Thank you!
MP
Please do post the link.. from where did u find this without no financial year??? Please re-check the question!
Hallo,
Here is the link, actually it’s under Technical articles for F7, but I’m solving the example for F3:
Please, give me an answer what the right solution is, I’m still not clear with it.
Thank you!
MP
Hallo,
I think I saw your point about the financial year, it’s mentioned in the beginning of the example, so from April to Sept is exactly 6 months, I’m still in a learning phase and have skipped it, now I’m only left with the 49600 vs 9600, which I assume should be 9600, then the solution all fits.
Thank you very much for the quick reply!
MP
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