Question
On January 1, 2025, Orion Ltd purchases equipment for $200,000. Residual value: $20,000. Useful life: 9 years. Straight-line. On January 1, 2028, the carrying amount is recalculated after three years of depreciation. Management now estimates remaining useful life of 5 years and residual value of $10,000. The asset is sold on December 31, 2030 for $75,000.
Required: Calculate the carrying amount at January 1, 2028, annual depreciation from 2028 onward, carrying amount at disposal, and the gain/loss on disposal.
Statements in this challenge
- Carrying Amount Jan 1, 2028Numeric Answer
- Revised Annual DepreciationNumeric Answer
- Carrying Amount at DisposalNumeric Answer
- Gain on DisposalNumeric Answer
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
How to approach this
IAS 1 — Presentation of Financial Statements
A composite challenge links several statements built from one set of data, so figures flow between them: profit reaches retained earnings, and the closing balances feed the position statement. Complete them in the order the statements depend on each other rather than the order of the tabs.
Common mistakes
- Preparing each statement independently, so the linking figures disagree.
- Carrying a figure forward before finishing the adjustments that change it.
- Reworking a linked figure in one statement without updating it in the others.
Further readingIAS 1: what goes where in a full set of statements