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Sorry you closed replies to new entries . The point I want to be cleared of is:
You said er no.
Fine agree sir that the current year charge was 20,000 but if you look at the current year charge on the plant & equip it was 9,360.
The 4,000 impairment on asset held for sale was also true figure.
My point is that the 9,360 was added to acc’ dep 36,400 and 21,000 dep of the asset held for sale was what amounted to 24,760.
36,000 + 9360 – 21,000 = 24,760.But for the Building only the current year charge (20,000) was aggregated to the dep figure of plant & equip. 20,000 + 24,760. Is there a rule for this?
If not, how do they arrive at 24,760 which is the addition of Acc’ dep 36,400 with current year dep charge $9,360 minus the 21,000 related to the dep of the asset held for sale and discountinued operations?
I hope you understand my real point.
Because your last sentence was that agregate dep was 20,000 + 24,760!
Why do u agree to 24,760? While not only current dep charges of both the current asset held for sale and the buildings?
Pls do not get upset , I just want to clear off this paper this time around .
When the building was revalued to 940, that was an increase of 376 over the carrying value of 524
That carrying value was the difference between cost (600) and accumulated depreciation (36)
So we started with two balances:
Cost 600 Accumulated depreciation 36 and a carrying value of 564
The revaluation of 376 (on the building) was credited to revaluation reserve
Where’s the debit?
The first 36 of that 376 was to the Accumulated Depreciation Account and the remaining 340 was to the Building Asset Account
So, following that revaluation, the Building Asset Account now reads 940 (600 +340) and the Accumulated Depreciation Account reads zero (36 – 36)
Now we’re ready to start depreciating that newly-revalued building of 940 over its remaining useful life of 47 years = 20 per annum
“Because your last sentence was that agregate dep was 20,000 + 24,760!”
I believe that I have now also explained this
OK now?
Sir thank you for your response and for keeping it open .
Let remind you that I have followed your teachings since October last yr . And I understood to some extent that to account for revaluation:
1) The cost has to be restated to the new valuation
2) Eliminate any existing acc’ dep for the asset
3) show d total increase in other comp income at d foot of SOPL which will be taken to revaluation surplus .Dr NCA cost
Dr Acc ‘ dep
Cr other Comp incomeUsing the revaluation alternative instead of cost model ,
Property plant and equipment may be carried at revalued amt less any subsequent acc’ Dep though with two conditions :
Make d revaluation with sufficient regularity to ensure no material differences btw CA & FV at reporting date.
When item of PPE is revalued , then the class of that asset to which the item belongs must be revalued.So this is to let you know that I have followed your teaching and I know how the 20,000 was achieved. But what about the 24,760? Asset held for say though an impairment of 4,000 was calculated and added to admin or cost of sales . But the current year charge was only 9,360 acc’ dep Was 36,400. How then do they arrive at 24,760? This is my question .
From the text solution it was 36,400 + 9,360 – 21,000= 24,760. Is this correct? Or was there any other way to arrive at this figure ?
“But what about the 24,760? Asset held for say though an impairment of 4,000 was calculated and added to admin or cost of sales . But the current year charge was only 9,360 acc’ dep Was 36,400. How then do they arrive at 24,760? This is my question .”
We started with36.4 and, following the re-classification as an asset held for sale, we needed to remove the associated depreciation on 21
That left us with 15.4 accumulated depreciation on our ‘live’ assets
The cost brought forward was 102.8 and, of that, 56 was reclassified as held for sale so that left us with a cost of 46.8
And we’re told that depreciation on the plant is calculated at the rate of 20% per annum
20% of 46.8 is 9.36
9.36 added to the above figure of 15.4 gives us the aggregate accumulated depreciation on our ‘live’ assets of 24.76
OK now?
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