Yellow plc revalues its plant and equipment (P&E) every two years. It is company policy to...

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Yellow plc revalues its plant and equipment (P&E) every two years. It is company policy to charge a full year's depreciation in the year of acquisition and none in the year of disposal. 1 January 2006: P&E was purchased at £780,000, and is depreciated at 20% per annum using the reducing balance method. 31 December 2007: P&E revalued to £550,000, with the remaining useful life revised to 4 years and the depreciation method being changed to straight line. Show how the P&E would be reflected in Yellow's financial statements for the year ending 31 December 2006 and 2007 and how depreciation charge for P&E in 2008 should be. Yellow plc revalues its plant and equipment (P&E) every two years. It is company policy to charge a full year's depreciation in the year of acquisition and none in the year of disposal. 1 January 2006: P&E was purchased at £780,000, and is depreciated at 20% per annum using the reducing balance method. 31 December 2007: P&E revalued to £550,000, with the remaining useful life revised to 4 years and the depreciation method being changed to straight line. Show how the P&E would be reflected in Yellow's financial statements for the year ending 31 December 2006 and 2007 and how depreciation charge for P&E in 2008 should be.

Answer rating: 100% (QA)

Extract of balance sheet Particulars Amount 31 Dec 2016 extract PE cost 780000 Less20 deprecia... View the full answer