How the asset will be accounted for in financial statements

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Boafo Bottling Ltd owns a bottling plant with an original cost of GHS200,000. It was acquired in January 2011. On acquisition, management determined that the useful life was 10 years and the residual value would be GHS20,000. The asset is now 8 years old , and during this time there have been no revisions to the assessed residual value. At the end of year 8 (as at 31 December 2018), management has reviewed the useful life and residual value and has determined that the useful life [from date of acquisition] can be extended to 12 years in view of the maintenance program adopted by the company. As a result, the residual value will reduce to GHS10,000.

Required

Question 1: Determine how the asset will be accounted for in the 2015 financial statements ( Statement of Profit and Loss for 2019 and Statement of financial position as at 31 December 2019)

Reference no: EM132613821

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