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Dear Mike,
I could not understand the question, therefore no clue about the answer.
Could you please help. Sorry for the generic question but I have never seen something like this before.Thanks in advance
Advent’ s licence is now carried at its recoverable amount. How should the recoverable amount be treated?
A. Deducted from finance costs
B. deducted from the cost of the asset
C. Recognized as investment income in the statement of profit and loss
D. Deducted from administrative expenses in the statement of profit or lossCorrect answer A
Thanks
Gabriella
The question doesn’t make any sense at all!!!
Have you missed off some vital piece(s) of information?
The poster omitted every information related to this question. Coincidently I also have confusion regarding this one. The question is from BPP Kit, Mock 1 question 30 (MTQ)
Well that’s helpful! I don’t have ANY material from ANY of the publishers!
If you want an answer, you’ll need to type out the question
Dear Mike,
Apologies for that.
It is true that I have completely omitted the scenario to allow you to check the question.
Thanks for your prompt response.Best Regards
Gabriella
Dear Mike,
I hope you can help me with the same question. Here is the scenario:
Advent is a publicly listed company. Details of Advent’s non-current assets at 1 October 2008 were:
Land and buildings
Cost/valuation: $280
Accum.depn: $40
Carrying amount: $240Plant
Cost/valuation: $150
Acc. Depn: $105
Carrying amount: $45Telecom. Licence
Cost/valuation: $300
Accum. Amortisation: $30
Carrying amount: $270The following information is relevant:
1) the land and building were revalued on 1 October 20X3 with $80 million attributable to the land and $200 to the building. At that date the estimated remaining life of the building was 25 years. A further revaluation was not needed until 1 October 20X8 when the land and building were valued at $85 million and $180 million respectively. The remaining estimated life of the building at this date was 20 years.2) plant is depreciated at 20% per annum on cost with time apportionment where appropriate. On 1 April 20X9 new plant costing $45 million was acquired. In addition, this plant cost $5 million to install and commission. No plant is more than 4 years old.
3) the telecommunications licence was bought from the government on 1 October 20X7 and has a 10 year life. It is amortised on a straight line basis. In September 20X9, a review of the sales of the products related to the licence showed them to be very disappointing. As a result of this review the estimated recoverable amount of the licence at 30 September 20X9 was estimated only at $100 million.
There were no disposals of non-current assets during the year to 30 September 20X9.
The question seemingly relates to point 3 of the scenario:
“Advent’s licence is now carried at its recoverable amount. How would the recoverable amount be treated?”A. Deducted from finance costs
B. Deducted from the cost of the asset
C. Recognised as investment income
D. Deducted from administrative expensesAll 4 options seem wrong to me but apparently the answer says the correct answer is A without providing any explanation as to why.
Could you please let me know your thoughts.
Thanks so much in advance.
Kind regards,
MaroWell thank you Maro for eventually giving me the full question
Now comes the embarrassing bit – I haven’t a clue!
The suggested solutions seem to have been pulled from Planet Zog and make no sense at all to we Earth-bound creatures
The suggested possible answers must relate to a different question because they certainly don’t relate to Advent and its non-current asset – a Telecom Licence
Hope you don’t get one like that next week!
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