Question 1

A company's property, plant and equipment had a carrying amount of $450,000 at the start of the year and $520,000 at the end of the year. During the year, depreciation of $60,000 was charged, and a machine with a carrying amount of $30,000 was sold for $35,000. What was the cash outflow for the purchase of new property, plant and equipment during the year? (Enter numbers only)

Accepted Answer

Set up a T-account for PPE Carrying Amount. Opening balance + Additions - Depreciation - Carrying amount of disposals = Closing balance. Solve for Additions.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using the sale proceeds ($35,000) instead of the carrying amount ($30,000) in the PPE account reconciliation.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 4

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