UK Depreciating Land and Buildings

Joined
Apr 4, 2020
Messages
2
Reaction score
0
Country
Hong Kong
Hi, I am a student self-studying A Level Accounting and I don't have a teacher to ask so I'm turning to this amazing forum.

The question I am attempting asked me to prepare a statement to calculate the adjusted profit for the year ended 30 June 2017 (details in the first picture). I just do not know how to calculate the increase in the depreciation for land and buildings, because I thought if the buildings were revalued, they would not need to be depreciated. Could anyone please help me deduce how the mark scheme deduced an increase in the depreciation for land and buildings as shown in the second picture?


Screen Shot 2020-04-04 at 10.20.39 PM.png



Screen Shot 2020-04-04 at 10.23.08 PM.png
 

Fidget

VIP Member
Joined
Jan 6, 2013
Messages
753
Reaction score
139
Country
United Kingdom
Even with revaluations, depreciation still applies.

Maybe I'm missing something here, but I'm not following how the additional depreciation has been calculated in the answer. The new charge for the year is ($2,700,000/3*4%) = $36,000. The original amount of ($2,400,000/3*4%) = $32,000 has already been charged and so the additional depreciation would be $36,000-$32,000 = $4,000. So I don't know where $13,000 comes from.

I can't see where the 20 & 25 that is being used in the working comes from either. If, along with the revaluation, the useful life had reduced from 25 years to 20 years, then $13,000 would be correct. But that piece of information is not there, so I don't know how it's been arrived at.
 
Joined
Apr 4, 2020
Messages
19
Reaction score
1
Country
United States
Same as US, that is what I thought but in depreciation I saw land and building.
 

Fidget

VIP Member
Joined
Jan 6, 2013
Messages
753
Reaction score
139
Country
United Kingdom
It's only because they're grouped together, and the question tells you how much of the cost is attributed to land and to buildings. You can see from the depreciation rates given too that none is charged on land.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top