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ACCA Applied Knowledge · Financial Accounting · Tangible non-current assets

A company's non-current asset register shows a carrying amount for plant of $184,000, while the general ledger shows $190,000 for the same category. Which is the most appropriate first action?

The first step is to reconcile the asset register to the general ledger and investigate the $6,000 difference. Possible causes include unrecorded disposals or unposted depreciation, so adjusting either record or writing it off without finding the cause could leave errors uncorrected.

  1. AWrite $6,000 off to profit or loss immediately
  2. BReconcile the register to the ledger and investigate the differenceCorrect
  3. CAdjust the ledger to agree with the register without enquiry
  4. DAdjust the register to agree with the ledger without enquiry

Explanation

The register and ledger should be reconciled regularly. A difference signals possible errors, unrecorded disposals or unposted depreciation, so it must be investigated before any adjustment is made. Forcing agreement either way, or writing off, could hide the real cause.

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