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Hi Mr John ,
Im doing the practice book of Kaplan , and In the Statement of PL , they always add the depreciation charge and RETURN INWARD in COSBut when I tried to practice the similarity questions in the Kaplan text book , they don’t show the same way like their practice book , they minus RETURN OUTWARD in COS and add depreciation charge in the administration expense .
And Im really confused ( As that will give a wrong answer when I calculate COS )As normally I add the depreciation charge , return inward in the COS , and return outward will be in distribution cost .
Is there any signs that we can know if the depreciation charge is in the COS or Administrative expense ?Many Thanks
As far as depreciation is concerned, it depends what is being depreciated. If it is a production company and the depreciation related to machine etc. used in production then it is part of cost of sales. Otherwise it is either an admin expense (e.g. depreciation of computers) or a selling expense (e.g. depreciation of salesmen’s cars).
As far as returns inwards or outwards is concerned, returns inwards are subtracted from the sales and returns outwards are subtracted from cost of sales.
Have you actually watched all of my lectures? They are a complete free course.
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