Question 1

A company's Property, Plant and Equipment (PPE) had a carrying amount of $500,000 at the start of the year and $620,000 at the end of the year. During the year, depreciation of $80,000 was charged, and a machine with a carrying amount of $40,000 was sold for $50,000. What was the cash paid to acquire new PPE during the year? (Enter numbers only)

Accepted Answer

Reconstruct the PPE carrying amount T-account. Opening balance + Additions - Disposals (carrying amount) - Depreciation = Closing balance.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Deducting the sale proceeds ($50,000) instead of the carrying amount ($40,000) from the PPE account.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 2

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