Bold ltd purchased mactinery on 1 lanuary 2021 at a cast of R1200000 A major inspection has to be carned out on themachinery every three years. The last inspectian perkumed on the mactine was on 31 December 2000 by the selli andthe inspection costs were included in the purchase price. On the acquisinich date, fhe present value of future expectedinspection costs to be incurred was estimatiod at an amount of R240 000. Dn the wequation date the estimatod usefullife of 10 years was alocated to the machime. The inspection component is part of the mactine and not a separate arset.The carrying amount of the machinery (including the inspection component) for the year ended 31 Decembe 2021 is: RI124000 A1 000000 R1 056000 P1 024000n

Here's a breakdown of the information and the calculation:Original Cost: R1,200,000 (includes…

Answered: Bold ltd purchased mactinery on 1…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bold Ltd purchased machinery on 1 January 2021 at a cast of R1 200 000. A major inspection has to be carried out on the machinery every three years. The last inspection performed on the machine was on 31 December 2020 by the selle and the inspection costs were included in the purchase price. On the acquisition date, the present value of future expected inspection costs to be incurred was estimated at an amount of R240 000. On the acquisition date the estimated useful life of 10 years was allocated to the machine. The inspection component is part of the machine and not a separate asset The carrying amount of the machinery (including the inspection component) for the year ended 31 December 2021 1. R1 124 000 O2 R1 000 000 O3 R1 056 000 4. R1 024 000
Jisoo Company purchased an equipment with a list price of 1,500,000 with the following terms:trade discount of 15%,2/10; n/30. The account was paid at the end of the 30 days. The useful life of 5 years. estimated dismanting cost ifs P70,000.The appropriate discount rate is 10%.determine the cost of acquisition of the Equipment?
Mwakisha, a contractor, started business on 1 January 2018. Purchases and disposals of machines over the subsequent three years were as follows: Machine Date of Cost Date of Purchase Disposal Shs. MA 1 1 January 2018 5,000,000 MB 2 1 July 2019 2,500,000 1 June 2020 MC 3 1 October 2020 7,000,000 The machines are depreciated on straight line basis using a rate of 20 per cent per annum. Required: For the years 2018, 2019 and 2020, calculate the depreciation…
Lian Company acquired a building on January 1, 2001 at a cost of P50,000,000. Thebuilding has an estimated life of 10 years and residual value of P5,000,000. Thebuilding was revalued on January 1, 2005 and the revaluation revealed replacementcost of P80,000,000, residual value of P2,000,000 and revised life of 12 years. What isthe revaluation surplus on December 31, 2005?
J. Mwakisha, a contractor, started business on 1 January 2018. Purchases and disposals of machines over the subsequent three years were as follows: Machine date of purchase cost date of disposal MA 1 1 January 2018 5,000,000 MB 2 1 July 2019 2,500,000 1 June 2020 MC 3 1 October 2020 7,000,000 The machines are depreciated on straight line basis using a rate of 20 per cent per annum. Required: For the years 2018, 2019 and 2020, calculate the depreciation attributable to each year using prorata or time basis.
ABC Limited is a manufacturing company with a 30 June year-end. On 1 July 2018, ABC Limited purchased plant at the cost of R1 200 000. Depreciation is calculated over 15 years by using the straight-line method with the plant having an insignificant residual value. ABC Limited's policy is to revalue the plant annually on 30 June and carry the plant at net replacement cost. They further realise revaluation surpluses while the relevant assets are used. The plant had the following gross replacement cost: • 30 June 2019 – R1 230 000 • 30 June 2020 – R1 275 000 Revaluations are done by an independent appraiser who determines the replacement cost with reference to observable prices in an active market. On revaluation, accumulated depreciation is set off against the gross carrying amounts. The residual value and useful life of the plant were reassessed on 30 June 2020, and no changes were noted. The South African Revenue Service grants a wear and tear allowance of 10% on the plant.…
On 2 January 2019, Johnston Ltd purchased a machine with a list price of $234 300 and credit terms of 2/10, n/30. Payment was made within the discount period. Freight costs of $5400 and installation costs of $5280 were also paid. The machine has a useful life of 4 years and a residual value at the end of its useful life of $24 000. Ignore GST. Required Determine the amount that should be debited to the machinery account and prepare a general journal entry to record the purchase, assuming a financial year ending 31 December. Determine the amount of depreciation expense for each of the 4 years ending 31 December assuming use of: the straight-line depreciation method the diminishing balance method of depreciation.
On 1 October 2019, company X (with a year-end as at 30th Sept) acquired an item of machinery for£10,720. During the year, the machinery had got damaged and was underperforming, although it was stillbeing used. By 30 September 2020, following the damage, the item of machinery had an estimatedremaining useful life of two years, a value in use of £6,300 and a fair value of £6,400. The costs to sell theitem of machinery amounted to £500. Company X depreciates machinery on a reducing balance basis ata rate of 20% per annum.Compute the impairment loss in relation to the aforementioned item of machinery to be shown in companyX’s income statement for the year ending 30th September 2020.
During 2020 the directors of Chana Ltd decided to value its industrial plant to market value. The plant was acquired on 1 June 2015 at a cost of R45 000 000 and had an estimateduseful life of 15 years on the date of acquisition. The plant was valued at R41 500 000 on 1 June 2019. Plant is carried using the revaluation method and depreciation is on thestraight‐ line basis. Prepare the journal entries only that would be processed on 1 June2019 in respect of the revaluation of the plant if the entity uses the eliminationmethod to revalue items.
Vardhaman Traders purchased a machinery on 4.4.2019 at a price of Rs 250000 and paid Rs50000 on the carriage of the machinery to bring it to the factory premises. Themanagement decides that charging depreciation as per the WDV method will make more sense.It was decided that –The depreciation would be charged @15% on WDV methodThe useful life of the machinery is 5 yearsThe machinery has been disposed off at the completion of 3 years at a value of Rs200000 Required-  Discuss the concept of charging depreciation through WDV method. Calculate the closing WDV and depreciation for all the first three years. Calculate the profit and loss, if any on the disposal of the asset .  Is this possible for any business entity to change the method of charging depreciation
Flowers Plc. owns a building that was acquired for £120, 000 on 1st July 2019. The year-end is on 31st December. The estimated useful life of the building is 10 years with an estimated residual value of £ 26, 200. Which will be the total accumulated depreciation for the building on 31st December 2021 using the straight-line method? O a. £28, 140. O b. £18, 760. O c. £23, 450. O d. None of the answers is true.
On March 9, 2019, Alpha Inc. purchased an equipment with a cost of HK$600,000, a useful life of five years and no salvage value. The Company uses the straight - line method. Depreciation is computed on the basis of the nearest full month. The following information is available at each year end: 12/31/2019 12/3 1/2020 Fair value less cost to sell HK$450, OOO HK$360, OOO Value,,in - use HK$440,000 HK$392,000 There is no change in the asset's useful life or salvage value Required: (a) Prepare journal entries to record depreciation expense and impairment test for 2019. (b) Prepare journal entries to record depreciation expense and impairment test for 2020.

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