Dec 2005 FRA exam 2.1 c very confuse
any2002uk
Registered Posts: 88 Regular contributor ⭐
For part c
i am very confuse with NBV and disposal! i use the same method then check the answer everything is wrong!
It said Original cost is £12000 so it is Debit Disposal, Credit Vehicle Cost BUT in answer, it is WRONG!
Then find the accumulate deprection £12000-NBV £6144= £5856 so the jornal is Accumulate Deprection £5856 Debit in Disposal. But in ANSWER again WRONG, i am now upset as i though i am doing well!!!!
Then they use Part exchange of £3500 so journal is Debit vehicle cost, Credit Disposal, again it is wrong in answer.
then i £10,000 was paid in bank so the journal is Debit vehicle cost, Credit Bank. it is okay!
My answer show these way but ANSWER iS WRONG where have i gone wrong?
where should i put Net book value in?
______Vehicle Cost______
Balance / Disposal
£22000 / £12000
Part exchg /
£3500 /
Bank /
£10,000 /
NEW BAL
23500
_____Disposal_____
cost /acc dep
12000 / 5856
.........../Part exchg i though p,e always in disposal credit?
.........../3500
...........LOSS -2644
thank you
i am very confuse with NBV and disposal! i use the same method then check the answer everything is wrong!
It said Original cost is £12000 so it is Debit Disposal, Credit Vehicle Cost BUT in answer, it is WRONG!
Then find the accumulate deprection £12000-NBV £6144= £5856 so the jornal is Accumulate Deprection £5856 Debit in Disposal. But in ANSWER again WRONG, i am now upset as i though i am doing well!!!!
Then they use Part exchange of £3500 so journal is Debit vehicle cost, Credit Disposal, again it is wrong in answer.
then i £10,000 was paid in bank so the journal is Debit vehicle cost, Credit Bank. it is okay!
My answer show these way but ANSWER iS WRONG where have i gone wrong?
where should i put Net book value in?
______Vehicle Cost______
Balance / Disposal
£22000 / £12000
Part exchg /
£3500 /
Bank /
£10,000 /
NEW BAL
23500
_____Disposal_____
cost /acc dep
12000 / 5856
.........../Part exchg i though p,e always in disposal credit?
.........../3500
...........LOSS -2644
thank you
0
Comments
-
The only part of the disposal account which gets included in the ETB is the loss on sale. This is the balance on the other adjustments. So you would credit the vehicles FA a/c with 12000, then debit the accumualted Depn which is 5856, then debit the vehicle FA with 3500 for the part exchange, then also debit the FA with 10000, which was paid from the bank but also credited to the FA a/c. I can't remember the reason for that exactly.
Then you would calculate the new Prov for Depn on the new vehicle at 13500 which is 3375. This would mean crediting the accum depn with 3375 and debit the depn charge in P&L a/c. In your workings show a rough T a/c of the disposals a/c, this will help you keep track of the movements, and show the examiner where you are entering your figures, but still get credit if you make a mistake in your additions rather than none at all, as this could make the difference between a pass or a fail.
All the best.0
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