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Question on FV adjustment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Question on FV adjustment

  • This topic has 3 replies, 3 voices, and was last updated 12 years ago by achandze.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 29, 2013 at 12:08 pm #123925
    achandze
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    Hi,

    Could you please help me with this short FV adjustment?

    On 1 Jan 20X7 Hardy owned items of equipment with a book value of $45m that had a fair value of $57m. These assets were orginally purchased by Hardy on 1 Jan 20×5 and are being depreciated over 6 years.
    In this question the statement of financial position was at 31 Dec 20X9.

    I understand that I have to deal with 12m extra FV adjustment (57-45) but don’t understand why in the answer extra depreciation is calculated as $12m x 3/4 =9m. Why 3/4?

    Kind regards
    Alicia

    April 29, 2013 at 1:58 pm #123954
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 3
    • ☆

    i think its because on 01/01/20×7, the building has already been depreciated for 2yrs our of the UEL of 6yrs… ie from 20×5-20×6…. there for the remaining number of years the building is now depreciated is 4yrs……if the statement of financial position was at 31 DEC 2009, then this will mean 3yrs out of the 4yrs remaining….. ie 20×7 to 20×9.

    6yrs of depreciation suld be as follows
    year 1… 20×5
    year 2… 20×6
    year 3… 20×7
    year 4…20×8
    year 5…20×9
    year 6…2010
    hope this is wright…..

    April 29, 2013 at 6:08 pm #124021
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Your logic is better than your spelling! Wright?

    And your answer is correct – it’s three years out of the four years remaining after the revaluation

    April 29, 2013 at 8:35 pm #124040
    achandze
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    Thank you both for your explanations.

    Open tuition is the best!!

    Bye for now.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Question on FV adjustment’ is closed to new replies.

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