Robby purchased plant, property and equipment (PPE) for $10 million on 1 June 20X9. It has an

Question:

Robby purchased plant, property and equipment (PPE) for $10 million on 1 June 20X9. It has an expected useful life of 20 years and is depreciated using the straight line method. On 31 May 20X1, the PPE was revalued to $11 million. At 31 May 20X2 impairment indicators triggered an impairment review of the PPE. The recoverable amount of the PPE was $7.8 million. The only accounting entry posted for the year to 31 May 20X2 was to account for the depreciation based on the revalued amount as at 31 May 20X1. Robby’s accounting policy is to make a transfer of the excess depreciation arising on the revaluation of PPE.


Required:

Discuss how the above item should be dealt with in the financial statements of Robby for the year ended 31 May 20X2.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

International Financial Reporting And Analysis

ISBN: 9781473766853

8th Edition

Authors: David Alexander, Ann Jorissen, Martin Hoogendoorn

Question Posted: