- October 20, 2019 at 11:30 am
Example 5 in depriciation chapter, Sir there are alot of confusions about the calculation of depreciation in second half of the year, can you please explain it’s calculation ? This would be so much helping, am getting 30,720 but you have mentioned other amount in comments below lecture video, the way am getting this amount is by this, 3072000*2%*0.5 am I doing any thing wrong there ?October 20, 2019 at 1:55 pm
Yes you are wrong – have you not checked the answer that is printed in the free lecture notes (with the workings)? (There is only one comment below the lecture asking about this figure, and in my reply I refer to the answer that is printed in the lecture notes!)
2% straight line means it was being depreciated over an expected life of 50 years, and the depreciation had therefore been at the rate of 2% x 3.6M = $72,000 per year.
As at 31 December 2002 the total depreciation was $1,080,000, and so it must have been owned for 1,080,000 / 72,000 = 15 years. It was revalued 6 months later and so at the date of the revaluation it had been owned for 15.5 years and therefore the remaining life is 50 – 15.5 = 34.5 years.
Therefore the new depreciation is 3,072,000 / 34.5 = 89,043 per year, and so the half year depreciation is 89,043/2 = $44.522October 20, 2019 at 7:53 pm
Thanks so much John for such a clear answer ??, sorry I got mixed up was looking for answers at the back for chapter 13 but the example was actually from depriciation chapter, that’s so dumb of me ?. Anyways thanks so much again.October 21, 2019 at 7:41 am
You are welcome 🙂
The topic ‘Revaluation Reserve’ is closed to new replies.