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DESPICABLE ME 3 Puzzle Video for Kids Learning Games DESPICABLE ME 3 Learning Games KIDS GAME CLUB

For more infomation >> DESPICABLE ME 3 Puzzle Video for Kids Learning Games DESPICABLE ME 3 Learning Games KIDS GAME CLUB - Duration: 2:55.

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ACCA F7 Tutorials 2017: Different measurements of assets and liabilities (Video 5) - Duration: 4:09.

So let's have a look at this question then and we'll do this, yeah, I think it's

better to explain this by doing the actual numbers. So the first thing I want

us to look at is the historic cost. If we are using the historic cost model then what

is the historic cost. Well historic cost is cost minus accumulated depreciation.

So in this case the cost is 280,000, we bought it a year ago, depreciation is 25%

so 25% of 280,000 is 70,000 and so

therefore the net book value using historic cost would be 210,000.

So that's historic cost. What about fair value then. OK, first of

all what is fair value. Well, fair value is the price that would be received if

you sold an asset or if you pay the liability in a normal transaction

between people at an arm's length transaction . OK, so what would it

actually sell for, what would be its fair value now. And the fair value would be

the 88,000 because this residual value maybe I should put is

that's the residual value now so it's fair value is 88,000

ignore the cost of advertising. OK, let's go on to current cost accounting.

If we're using current cost accounting. First of all you might want to say what

current cost accounting is; it's the amount that you'd have to pay if the

same or an equivalent asset was acquired currently. Alright so the same or the

equivalent so that's the replacement cost 360,000

but it says the same or the equivalent this one is 20% more

efficient so this one is working in a 120% compared to a

100% so therefore all you gonna do

divide that by the 120 and times it by the 100 to get to how efficient we are

now. So that would be 300,000 but that would still be for a brand new one okay

I want to know the equivalent so that's dealt with the efficiency to deal with

the efficiency first and then deal with the age second, so we now have to

depreciate that 300,000. That 300,000 then needs some depreciation on it and the

depreciation 25%. So 25% depreciation would be 75,000 so that would bring you

down to 225,000 that's the current cost. Now let's have a look at net realisable

value, okay.Net realisable value what we could

sell it for if you remember was 88,000 and the difference

between that and the fair value now is that it's the less cost to complete the

sale which is the 500 cost of advertising there so we would be at

87,500. All right finally the present value of future cash

flows. The present value of future cash flows. So take all your future cash flows

which would be 40,000 per year as it's the same amount here then you can use an

annuity. Now the examiner would probably give you the annuity in the exam so the

annuity for 6% for 5 years. I will give you it as being 4.212

so you just take the 40,000 and you times it by 4.212 and

that comes to a 168,480

So what you are gonna do now is to go and do

few more questions on this.

For more infomation >> ACCA F7 Tutorials 2017: Different measurements of assets and liabilities (Video 5) - Duration: 4:09.

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ACCA F7 Different types of measurement techniques: Historical Cost (Video 6) - Duration: 1:57.

Alright we now move on to measurement techniques. Different ways we can measure

things. And the first thing we're thinking of here is a historical cost. So

historical cost what do we mean by that. Well, very simply is the amount you'd

paid for isn't it, so historical cost the amount that you paid for it and then you

just depreciate it away, all right, so that's basically what we're looking at.

Here, now onto then go on to some advantages

and disadvantages of using this system. This is the system that we actually use.

So advantages you know what the historical cost is you don't have to

keep it up to date or anything it's known and therefore it can be checked to

an invoice it's verifiable and so also it's very stable your account you don't

have to keep them up today so they're not volatile so known verifiable and stable

or 3 advantages. The 3 are the main reasons why we use historical cost

accounting. However there are disadvantages to it because obviously

things get out of date very quickly if you're using a historic cost for 5

years later that's not the cost of replacement would be now. Now because the

price of things tends to go up then your depreciation is based on your historic

figures. See, depreciation you could argue would actually be a little bit low as

well and because of that then your profits will be shown to be a little bit

high and over time because of inflation etc then it's hard to compare isn't it.

It's hard to compare overtime because what you paid for something 10 years ago is not

the same now and users tend to be a little bit more interested in current

cost. Okay so there are the things that you need to remember for historical cost.