Entity A is a local construction company, which provides construction services to different types of customers. On 16 December 2017, Entity A ordered a concrete plant from Entity B. The listed price of the plant is $680,000 for general customers. Entity B offers a 15% trade discount to Entity A because it is one of its loyal customers. According to the local environmental protection regulation, Entity A is required to remove the concrete plant at the end of the reporting period of 2022. The removal cost of $5,100 and the plant residual value of $4,013 was estimated at the inception of the contract respectively. The plant was delivered to Entity A on 1 January 2018. According to the contract, Entity B provides a 2-month credit period to Entity A. Finally, Entity A fully settled the outstanding amount on 1 February 2018. Installation and testing services are required to make the plant ready for use. On 1 January 2018, Entity C, the installation and testing service provider completed the concrete plant installation and testing services and certified the plant was really for use by Entity A. The cost of installation and testing services is $6,000 and it was settled with Entity C by cheque on 1 January 2018. At the inception stage, Entity A expected the useful life of the concrete plant is 5 years.
Entity A is a local construction company, which provides construction services to different types of customers.
On 16 December 2017, Entity A ordered a concrete plant from Entity B. The listed price of the plant is $680,000 for general customers. Entity B offers a 15% trade discount to Entity A because it is one of its loyal customers.
According to the local environmental protection regulation, Entity A is required to remove the concrete plant at the end of the reporting period of 2022. The removal cost of $5,100 and the plant residual value of $4,013 was estimated at the inception of the contract respectively.
The plant was delivered to Entity A on 1 January 2018. According to the contract, Entity B provides a 2-month credit period to Entity A. Finally, Entity A fully settled the outstanding amount on 1 February 2018.
Installation and testing services are required to make the plant ready for use. On 1 January 2018, Entity C, the installation and testing service provider completed the concrete plant installation and testing services and certified the plant was really for use by Entity A. The cost of installation and testing services is $6,000 and it was settled with Entity C by cheque on 1 January 2018. At the inception stage, Entity A expected the useful life of the concrete plant is 5 years.
On 31 December 2022, the removal cost incurred was the same as the estimated amount and it will be paid in the first week of 2023. Finally, the residual of the concrete plant was sold for $4,500 only. A cheque was received on the same date.
Entity A always applies to discount with a rate of 8.05%.
REQUIRED:
According to relevant accounting standards, prepare
ACCOUNTS FOR INPUT:
| PPE | Bank | Inventory | Revenue | Cost of sales | Payable | Receivable |
| Restoration liability | Interest expense | Interest revenue | Depreciation | Accum. depreciation |
| Loss on disposal | Gain on disposal | Share capital |
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