Thanks for the feedback. Lets use the date in the question; 2017 and 2016. The figures PPE figures in the question were $284m for 2017 and $241m for 2016. There was a policy change which resulted in an error committed in both 2016 & 2017 financial statement. These errors must be corrected retrospectively. 1. Lets start with the 2017 PPE figure (the 10m which was expensed must be treated as part of the cost the PPE or capitalized not expensed in 2017). The first entry with respect of the Borrowing cost expensed was in 2016; this means that there must be a carry forward of that amount into the next accounting year, which was not done. The borrowing cost was incurred in both 2016 and 2017. In that case, the carry forward amount from the previous year (2016) $10m must be added to the 2017 PPE figure of $284m making $294m. Then the actual borrowing cost incurred in 2017 must also be added back; thus, $294m plus $10m, now making $304m. So this why the corrected PPE figure for 2017 is $304m. 2. The PPE figure in 2016 was $241m. Adding back the borrowing cost incurred in 2016 gives us $241 plus $10m, giving us $251m. In conclusion, the reason the 2017 and 2016 PPE figure will not be $281m and $241m respectively is because of what is happening in the question. The PPE figures were affected with the errors committed and therefore must be adjusted to reflect the corrected amounts. Thank you. Feel free to reach me on +233542341911 in case of any further difficulties. Best regards. Albert
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Thanks but PPE is not 304 is 284for 2017 and 2018 is not 251 is 241...but i don't understand why you have used those figures..?
Thanks for the feedback.
Lets use the date in the question; 2017 and 2016. The figures PPE figures in the question were $284m for 2017 and $241m for 2016. There was a policy change which resulted in an error committed in both 2016 & 2017 financial statement. These errors must be corrected retrospectively.
1. Lets start with the 2017 PPE figure (the 10m which was expensed must be treated as part of the cost the PPE or capitalized not expensed in 2017). The first entry with respect of the Borrowing cost expensed was in 2016; this means that there must be a carry forward of that amount into the next accounting year, which was not done. The borrowing cost was incurred in both 2016 and 2017. In that case, the carry forward amount from the previous year (2016) $10m must be added to the 2017 PPE figure of $284m making $294m. Then the actual borrowing cost incurred in 2017 must also be added back; thus, $294m plus $10m, now making $304m. So this why the corrected PPE figure for 2017 is $304m.
2. The PPE figure in 2016 was $241m. Adding back the borrowing cost incurred in 2016 gives us $241 plus $10m, giving us $251m.
In conclusion, the reason the 2017 and 2016 PPE figure will not be $281m and $241m respectively is because of what is happening in the question. The PPE figures were affected with the errors committed and therefore must be adjusted to reflect the corrected amounts.
Thank you.
Feel free to reach me on +233542341911 in case of any further difficulties.
Best regards.
Albert
So fot the 2017 PPE isn't it supposed to be just (284+10+10)
I'm a little confused about the 304+10+10
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