The ACCA F7-Mini Exercise 6-Q4 Disposal and Cost of sales

Dr S of C I means “debit statement of comprehensive income” so it’s an expense but not an expense to put through the statement of profit or loss

However … where an entity prepares a single statement that combines statement of profit or loss with the statement of comprehensive income, that combined statement is titled Statement of Comprehensive Income and I’ve a feeling that that is the situation here

A loss on disposal arises because the accumulated depreciation on the asset being sold is not enough ie we should have charged / accumulated more depreciation

IF we had depreciated the precise amount (hindsight is wonderful isn’t it!) then the accumulated depreciation that has been built up over the life of that asset will have been expensed through the cost of sales figure (typically (but not always!)) and is apparently not enough because now we are experiencing a loss on disposal

So that loss on disposal, expressed differently, could be called “under-provision of depreciation in prior years” and should be expensed through cost of sales

As for research and development expenses, a question will direct you to the expense heading where this should be included

If the question DOESN’T tell you, then put it in cost of sales by default

OK?