Although most items in financial statements are shown at their historical cost, increasingly the IASB is requiring or allowing current cost to be used in many areas of financial reporting.

Entity A acquired a plant on 1 October 2016 at a cost of $500,000. It has an expected life of five years (straight-line depreciation) and an estimated residual value of 10% of its historical cost or current cost as appropriate.

On 30 September 2018, the manufacturer of the plant still makes the same plant and its current price is $600,000.

What is the correct carrying amount to be shown in the Statement of Financial Position of Entity A on 30 September 2018 under historical cost and current cost?

Answer rating: 100% (QA)

Historical Cost Residual value 500000 10 50000 Historical cost annua... View the full answer