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Hi Sir,
The equation to calculate payment for non-current asset is:
Opening net book value(carrying amount) + payment for non-current asset + revaluation – depreciation – disposal = Closing net book value(carrying amount)
However, in the T-account of answer of 19.6, the opening and closing value of non-current asset is cost instead of net book value. Could you help to explain. Thank you so much, sir!
Sir, I’m also confused by question 20.10
I used the equation:
Opening balance of trade payables + Purchase – Payment to suppliers + refunds received from suppliers – Discounts received = Closing balance of trade payables.
But I don’t know why ‘Costs of goods taken from inventory by Senji for her personal use’ also affected the equation. Could you please help. Thank you so much!!!
In Q 19.6, the t-account in the answer uses the opening and closing figures from the SOFP, and these are the net book values and not the cost.
in 20.10, if the owner takes goods for their own use, then they are drawings and the double entry is to Cr Purchases (because they are not being used by the business) and Dr Drawings.
Thank you sir!
But I’m so confused because I thought in the SOFP, the value of assets is always the original value. And in other questions, it is clearly shown in the SOFP whether the amount is carrying amount or original cost but in this one, it only says ‘non-current assets’. So how could we judge? Thank u so much sirAssets are always shown in the SOFP at original cost less accumulated depreciation.
Do watch my free lectures on this. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Hi sir, yes I’ve watched your lecture on this, that’s why I’m confused because in this question, it didn’t show cost and accumulated depreciation separately but only showed a single value. So I don’t know what this value is 🙁
The final value on the SOFP is always the original cost less the accumulated depreciation.
I say in my lectures that although the cost and accumulated depreciation have to be shown separately, they can do this either on the face of the SOFP or as a separate note to the accounts.
In either case, the amount added in to other assets on the SOFP is always the net book value – there is no exception to this!
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