At the time of revaluation of factory there left 7years of life for it (dec95 to dec 08 is 13yrs period so remaining life is 7year). But answer states it is ten years. ???
1. as per note (1) we calculate on Jan 1,2009 Value of Factory is £750K after revaluation. 2. now comparing this with Value on Dec 31,09 i.e. £675K; we can compute depriciation for 2009 amounting £75K. 3. now working backwards; Balance in Jan 09 divided by dep. for year 09 i.e. 10years we get revised estimate of life of factory. (assuming estimate of useful life changed, but nowhere mentioned such in question) Is remaining life mentioned in note 1 to solution is computed so?? 4. now spreading the value £750K over 10 years we get dep. of £75K. is this right or there's printing mistake ?!
Yes, the depreciation is £75,000. I think the date on page 15 in the first line of (b) should be 1998, but you can work it out as you have done as £750,000 - £675,000.
