1.

In accordance with revised PAS 16,paragraph 55,states that depre ciation of the retired asset is provided normally until the asset is disposed of. 2. It is necessary that depreciation be recorded up to the date of disposal with respect to assets subject to depreciation. 3. Review of PEATCs JVs showed that there was no entry made for depreciation expense as of date of disposal for each PPE and this means that depreciation was not updated making the depreciation account understated. 4. If the asset is retired from active use and held for disposal, the asset account and the related accumulated depreciation account are closed, and the asset is carried at book value or net realizable value, whichever is lower. 5. Review of JVs showed erroneous entries made during disposal of assets as follow: 6. Accumulated depreciation being closed was understated for not updating the depreciation expense. The retired fixed assets account on the other hand was overstated. 7. Crediting the depreciation expense during disposal is not allowed. 8. With the foregoing blah.,we recommend the management to.. a. Correct the entries and make the necessary adjustments b. And follow the rules regarding depreciation of PPE during retirement and disposal.