Page 469 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

Solution
The original depreciation was:

Cost – residual value $100,000 – Nil
–––––––––––––––– = ––––––––––––– = $10,000 pa
Useful economic life 10

The asset has been depreciated for 3 years when the change of useful
economic life occurs and therefore the carrying amount would be:

Cost $100,000 – (3 × $10,000) = $70,000
The carrying amount at the date of the change is the carrying amount on the
statement of financial position for the asset and must therefore be used to
recalculate the new depreciation charge.
Carrying amount – residual value $70,000 – Nil
––––––––––––––––––––––––––– = ––––––––––– = $14,000pa
Useful economic life 5
Statement of financial position (extract)

20X4
$
Cost 100,000
Accumulative depreciation 44,000
–––––––
Carrying amount 56,000
–––––––

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