Hi all, I was looking at the sept 2020 question above and the mark scheme doesn't include depreciation of plant and equipment in the cost of sales. Does anyone know why this is? Property is revalued and results in a loss of revaluation and this is included in the cost of sales, but property and plant is excluded.
Hi Good question - the (lack of!) depreciation info for the year for plant and equipment is certainly an unusual feature. Usually, depreciation figures given in the trial balance are accumulated figures to the start of the year, and we're given separate info in the info below the trial balance about how to work out the depreciation for the current year and we incorporate this into the cost of sales (as you say). This question doesn't provide any information about how to work out the current year's depreciation for the plant and equipment. So, we have nothing to incorporate into the cost of sales. For the property, we are explicitly given info below the trial balance, so can explicitly include this as you say. [For the plant and equipment we are, instead, implicitly assuming that this year's depreciation has already been reflected in the information provided, eg the accumulated plant and equipment depreciation already includes this year's figure as does one of the other costs of sale, perhaps the manufacturing costs.] Hope this helps Lynn
Hi Lynn, I think I understand now. So if a question only provides info such as original cost and depreciation to date, but no way to calculate the depreciation for the year (or no indication on how to calculate, at least), then should we ignore it and assume it has been implicitly incorporated? In effect, it means this was just a red herring for this paper as we didn't need it.
