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1) In example 2, i understood in depreciating the 14,000 but did not understand why we do not depreciate the 8,000
2) Did you subtract all of the 3,850 (from the carrying value before) because it told us that the asset had a zero residual value?
Thanks!
Hi,
1. We would depreciate the 8,000 over the remaining useful life but this is done in the following year, 20X6. The reduction in value to 8,000 happened on the last day of the reporting period.
2. No, we deducted the 3,850 as this is the amount that was held in the revaluation reserve that we can use for the impairment. The remainder of 400 goes through profit or loss
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