11-23-2011, 07:32 PM
salam
take an example of a Motor Vehicle as an asset. the entity replaces the tyres (Old) of the vehicle and adds the cost of the New tyres in the CA(carrying Amount)of Vehicle.
The Co. will have to derecognise the CA of the replaced (old) tyres if that can be determined...
If CA of replaced tyres can not be determined, the Co. will have to make an estimate of the CA of replaced tyres by comparing it with the cost of the new tyres. Like, If new tyres costs. Rs. 20,000 definitely old tyres will not cost Rs. 20,000... it may be somewhat around Rs. 15,000 (say) in the year in which it is acquired.. So, if old tyres costed Rs. 15,000 (estimate), surely it would have loose its value to somewhat like Rs. 12,000 (as wear n tear etc)... So CA of replaced tyres would be Rs. 3,000 (15000-12000)
Rs. 3,000, the CA of replaced tyres, will be derecognised from the CA of Motor Vehicle.
NOTE these are totally my understandings and a different answer might be there..
regards.
take an example of a Motor Vehicle as an asset. the entity replaces the tyres (Old) of the vehicle and adds the cost of the New tyres in the CA(carrying Amount)of Vehicle.
The Co. will have to derecognise the CA of the replaced (old) tyres if that can be determined...
If CA of replaced tyres can not be determined, the Co. will have to make an estimate of the CA of replaced tyres by comparing it with the cost of the new tyres. Like, If new tyres costs. Rs. 20,000 definitely old tyres will not cost Rs. 20,000... it may be somewhat around Rs. 15,000 (say) in the year in which it is acquired.. So, if old tyres costed Rs. 15,000 (estimate), surely it would have loose its value to somewhat like Rs. 12,000 (as wear n tear etc)... So CA of replaced tyres would be Rs. 3,000 (15000-12000)
Rs. 3,000, the CA of replaced tyres, will be derecognised from the CA of Motor Vehicle.
NOTE these are totally my understandings and a different answer might be there..
regards.
