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Hi my Dear Tutor, trial balance at 31 March 2017
Contract price 40000
cost to date excluding depreciation-8000
estimated cost to completion excluding depreciation-15000
Plant acquired on 1 october 2016-12000
residual value -3000
contract starts from 1 october 2016 and continues 18 months
complete%is 30
time apportionment
1 october 2016 to 30 September 2017 including 31 March 2018 will be 18 monthsSo ,
cost to date depreciation
1 october 2016 to 31 march 2017-6 months
( (12000-3000)*6 months/18)-4500estimated cost to completion depreciation
31 march 2017 to 31 march 2018-12 months
((12000-3000)*12/18)-6000-why it is not correct?
if contract starts 1 october 2016 and completes on 31 march 2018 why then it is divided partly such as 4500 and 4500?
I understood cost to date part but estimated cost to completion should be 12 months after
31 march 2017 to 31 march 2018-12 months?could u explain?
“cost to date depreciation
1 october 2016 to 31 march 2017-6 months
( (12000-3000)*6 months/18)-4500”Your calculation is incorrect!
“((12000-3000)*12/18)-6000-why it is not correct?”
Again and, in answer to your specific question, because it’s wrong!
“if contract starts 1 october 2016 and completes on 31 march 2018 why then it is divided partly such as 4500 and 4500?”
I don’t understand where the second $4,500 has appeared from
“could u explain?”
Simply, yes! You’re making too many mistakes!
In the answer they just showed it in the following way
COst to date-8000
depreciation 4500estimated cost to completion-15000
depreciation 4500I also did not understand where second 4500 appeared that is why i asked:(
By the way i took it from Revision question bank of Becker calling Dune.It is one of the note of DUNE.
Agreed selling price-40000
cost to date-8000
cost to complete-15000
plant(12000-3000)-9000
total estimated profit-8000under p/l
revenue(40000*30%)—-12000
cost of sales(32000*30%)—9600
profit 2400why 32000?Why did nit show time apportionment of plant’s depreciation?
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