Required: Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment.
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Q: b) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value…
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Subject: Corporate Accounting
Q) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs $900000,
Required:
Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment.
Step by step
Solved in 2 steps
- b) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs $900000, accumulated depreciation $300000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent.Required:Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs $900000, accumulated depreciation $300000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent. Please answer the below :1: Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment.On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying value in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent. Required: Prepare the necessary journal entries in 30 June 2017 to eliminate the intra-group transfer of equipment.
- I want to know the full solution of following question. On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd bookwas $600000 (costs $900000, accumulated depreciation $300000). This plant has a remaining useful life of five (5)years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rateis 30 percent.Required:Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-grouptransfer of equipment.1. A special manufacturing and handling device was purchased by Alfonso Manufacturing for $200,000 and is depreciated over MACRS. CFBT is estimated to amount to $800,000 for the first 2 years followed by $600,000 thereafter until the asset is retained. The effective tax rate, Te is 35% and interest is 10% per year. In present worth dollars determine the CFAT and determine if it was a viable purchase. (Note answer must be in a tabular format)XYZ, a manufacturing company, purchases a property for Ghs1m on 1 January 2016 for its investment potential. The land element of the cost is believed to be Ghs 400,000 and the buildings element is expected to have a useful life of 50 years. At 31 December 2016, local property indices suggest that the fair value of the property has risen to Ghs1.1m. Requirement Explain how the property would be presented in the financial statements as at 31 December 2016 if XYZ adopts the Cost model andFair value model.
- On 1 July 2019 Manila Ltd sold an item of plant to Tokyo Ltd for $600,000 when its carrying value in Manila Ltd book was $800000 (costs $1200,000, accumulated depreciation $400,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent. Required: Pass the necessary entry in 30 June 2020 to eliminate the intra-group transfer of equipmentThe term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Supreme Company is considering the purchase of an asset as of January 1, 2017. The cost of the asset with a five-year life and zero residual value is $100,000. The company will use the straight-line method of depreciation. Supreme's income for tax purposes before recording depreciation on the asset will be $50,000 per year for the next five years. The corporation is currently in the 35% tax bracket. Required: Calculate the amount of income tax that Supreme must pay each year if the asset is and is not purchased. 1. Amount of taxes paid if asset is not purchased is: $fill in the blank 1 2a. Amount of depreciation if asset is purchased is: $fill in the blank 2 b. Amount of taxes paid if asset is purchased is: $fill in the blank 3 3. What is the amount of the depreciation tax shield? $fill in the blank 4Question oneAbani Limited acquired a machinery on 1/1/2020 for K200,000. The company depreciates the machinery at 25% per annum on cost. The company`s tax rate is 35% and that the year end is 31/12.The company is entitled to the following capital allowances:Year K2020 100,0002021 100 0002022 02023 0The company also had the following profits before tax but after depreciation as follows:Year K2020 125,0002021 140,0002022 175.0002023 192,000You are required to prepare the profit and Loss account extracts for all the yearsa) Ignore Deferred tax b) Include deferred tax c) Statement of Financial position (extracts) for the years 2020 to 2023
- On 1 January 2019, Metsi Limited purchased a plant for R1 500 000 cash. The plant was immediately available for use. It was determined that the plant needs to be dismantled at an estimated cost of R250 000 at the end of its useful life of five years. Assume all criteria for the recognition of the dismantling provision has been met and that it is not used to produce inventories. A fair discount rate of 10% per annum (pre-tax) is applicable. The plant has no residual value and Metsi Limited uses the straight-line method to calculate depreciation. Calculate the depreciation expense recognised in the current financial year ending 31 December 2019. a. R350 000 b. R300 000 c. R331 046 d. R335 318On 1 May 2021, Topdog Ltd. buys and puts into service an item of specialised equipment to increase the production capacity of its Property, Plant and Equipment. Details of the new equipment item are: Cost $314,000 Estimated residual value $14,000 Estimated useful life = 10 years (to be used equally over its life) The equipment will be purchased by issuing 110,000 shares at $1 each and borrowing the remaining amount. The loan will be repaid in a lump sum in 2025. The interest of 10% p.a. will be paid at the end of each 6 months after the purchase of the equipment. Topdog Ltd. failed to record the new equipment in the 30 June 2021 annual financial statements. Management discovered the omission in October 2021 and decided that the omission is material. Required: Prepare the journal entries in October 2021 to record the omitted information. Explain the change (including amounts) to Topdog Ltd’s net profit, total assets, total liabilities and total equity after the correction of…197 intangibles: Oa. Include intangible assets created and not purchased by the taxpayer Ob. Are amortized based on current fair market value rather than their actual cost. Oc. Must be amortized over a 15 year life, regardless of their actual life. а. Od. Do not include purchased goodwill or going-concern value.