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revalued asset depreciation calculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › revalued asset depreciation calculation

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • December 4, 2015 at 4:23 am #287396
    for8verlik
    Member
    • Topics: 17
    • Replies: 25
    • ☆

    Where an asset is to be revalued, the following information is relevant:

    This is the end of the asset’s seventh year
    Original cost $800,00
    Depreciation for 7 years at 10% straight line $ 560,000
    Asset to be revalued by $600,000
    Estimated remaining useful life revised to 5 years.

    What figure shall be debited to the asset Account and what will the nxt year depreciation charge be?

    answer depreciation $168000

    can anyone explaining this to me?
    why not 600,000/5=120,000

    December 4, 2015 at 9:01 am #287458
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    It’s being revalued BY $600,000 not revalued TO $600,000

    (and the amount debited to the asset account should be $40,000)

    OK?

    December 4, 2015 at 9:04 am #287461
    for8verlik
    Member
    • Topics: 17
    • Replies: 25
    • ☆

    ok, so ie increment book value of 40,000, thus cost 800,000+40000=840,000
    divide by revised 5 yr = 168000, my logic on right track right? thanks Prof Mike

    December 4, 2015 at 9:14 am #287465
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    Yes, that’s correct (and just “Mike” is sufficient, thanks 🙂 )

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