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part b in land and building its given depreciation rate of 2 % is correctly applied estimated life of land and building is 50 years how do we get the estimated life of 50 years ?
in plant and machinery …depreciation has been charged full in the year of acquisition and not charged in the year of disposal .how do we get to know about this policy although its not given and they are saying that 20% is correctly applied please explain the whole point
for motor vehicles i am not able to understand the whole paragraph can u please guide thank you
Where is this question from? I need to be able to access it to answer your question.
I can answer your first point only: 2% x 50 = 100. I.e, 2% will write off the asset after 50 years.Land and buildings: 2% depreciation pa implies that the building will be written off after 50 years (2 x 50 = 100).
Well, that policy of applying depreciation to the year end cost balance reconciles with the charge. If you don’t assume that policy, there is no way to verify the depreciation charge as you would need to know precisely when each asset was bought or sold. The policy of a full charge in yr of acquisition and none in yr of disposal is very common in practice. The main point is that the depreciation on the disposed items is greater than their cost.
When disposed off, MVs were fully depreciated ie cost = depreciation (not really relevant). However, the depreciation rate is 33% ie a life of 100/33% = 3 years. However they were sold after 5 years. This implies that the life of a MV is 5 years and therefore that they should be depreciated over 5 years ie 20%pa.
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