Sidgrey pty ltd bought a plant five years ago for 50 million dollars when the CPI was
Question:
Sidgrey pty ltd bought a plant five years ago for 50 million dollars when the CPI was 300. The estimated economic life of the plant was 10 years. Now the CPI is 450, the plant would cost 75 million to replace but would only fetch 33million if sold on the nearest relevant open market. Last year end the CPI was 400 and the plant’s resale value was 44 million. Depreciation was provided last year on a fair value basis and the plant’s carrying value was shown after impairment. You are required to calculate the backlog depreciation to be provided upto the beginning of this year and for this year under CPP, under CCA and under level 2 fair value, then briefly explain which method is to be preferred under normal conditions.
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders , Marcia Cornett