Peasy Limited purchased a specialized item of plant, details of which are as follows: Cost ( purchased on credit) R660 000 Date of purchase 1 January 2014 Useful life 5 years Residual value Nil Depreciation method Straight line This item of plant is measured under the revaluation model and had the following fair values: 1 January 2016 R528 000 1 January 2017 R440 000 Peasy Limited transfers the realized portion of the revaluation surplus to retained earnings over the useful life of the plant. REQUIRED Prepare the journals for the plant for the year ended 31 December 2014 to 2017 assuming: a) The gross replacement value method is used. b) The net replacement value method is used.
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- MacPro Property Bhd acquired an investment property on 1 January 2015 and measured it using the cost model. On 1 January 2018, MacPro Property Bhd changed the accounting policy and used the fair value model to measure investment property. The acquisition cost of the property was RM70 million and the estimated useful life was 35 years. The fair values of the property were measured as below: Date RM (in million) 31/12/2015 72 31/12/2016 74 31/12/2017 78 31/12/2018 83 Profit after depreciation on investment property but before tax for 2017 and 2018 were RM80 million and RM95 million, respectively. Retained earnings brought forward on 1 January 2017 and 2018, were RM150 million and RM210 million, respectively. Assume that tax rate for 2017 and 2018 was 25%. REQUIRED: Discuss the accounting treatment of the above transaction in accordance to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors. Prepare the comparative…Z Limited purchases an asset for $50,000 from CashCrow Company on 1 January 2015 for cash. Z Ltd also pays for delivery of the machine and installation of the machine which cost $6,000 Record the purchase of the machine for Z Ltd Z Ltd expects to use this machine for a period of 10 years and the machine is expected to have a residual value of $2,000 Record depreciation on this machine for the year ended 31/12/2015 How Is the purchase of this machine reflected in the cashflow statement of: CashCrow Company for the year ended 31/12/2015? – cash inflow investing activities ($50,000) Z Ltd for the year ended 31/12/2015 – cash outflow investing activities ($56,000)The following information relates to Mangi Food cash generated unit. Goodwill attributable to the cash generated unit amounts to R57 000 and the CGU consists of the following assets. Acquisition date Cost Depreciation policy Building 1 January 2019 356 780 5 years straight line with R10 000 residual value Plant 31 July 2017 234 600 10% diminishing balance Equipment 6 July 2019 123 450 5% on cost Machinery 1 January 2017 200 000 10% on cost Value in use and fair value amounted to R620 000 and R565 700 respectively. And cost to sell were estimated as R13 400. Required Calculate and allocate the impairment of CGU.
- ABC Ltd acquired an item of machinery on 1 July 2021 for a cost of $120 000 When the asset was acquired it was considered that the asset would have a useful life to the entity of five years, after which time it would have no residual value It was considered that the pattern of economic benefits would best be reflected by applying the sum-of-digits method Contrary to expectations, on 1 July 2023 the asset was sold for $80 000 Required 1. What was the profit on disposal on 1 July 2023 and what are the journal entries to record the disposal? (Use sum of digit depreciation method) 2. Prepare Depreciation Schedule for the period.Global Positioning Net purchased equipment on January 1, 2018, for $15,233. Suppose Global Positioning Net sold the equipment for $11,000 on December 31, 2020. Accumulated Depreciation as of December 31, 2020, was $10,155. Journalize the sale of the equipment, assuming straight-line depreciation was used. First, calculate any gain or loss on the disposal of the equipment. Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Gain or (Loss)A. MacPro Property Bhd acquired an investment property on 1 January 2015 and measured it using the cost model. On 1 January 2018, MacPro Property Bhd changed the accounting policy and used the fair value model to measure investment property. The acquisition cost of the property was RM70 million and the estimated useful life was 35 years. The fair values of the property were measured as below: Date RM (in million) 31/12/2015 72 31/12/2016 74 31/12/2017 78 31/12/2018 83 Profit after depreciation on investment property but before tax for 2017 and 2018 were RM80 million and RM95 million, respectively. Retained earnings brought forward on 1 January 2017 and 2018, were RM150 million and RM210 million, respectively. Assume that tax rate for 2017 and 2018 was 25%. REQUIRED: Discuss the accounting treatment of the above transaction in accordance to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors. Prepare the comparative financial…
- Balloon Ltd (Balloon) purchased an item of equipment on 1 July 2015 for $2 million. At that time the useful life of the equipment was assessed to be 10 years, with no residual value. Balloon applies the revaluation model to its equipment. On 30 June 2020 the carrying amount of the equipment was $1 million and the fair value of the equipment was assessed to be $1,100,000. Accordingly, a revaluation gain of $100,000 was recognised. The useful life of the equipment remained at five years. The same equipment is up for revaluation again on 30 June 2023 (three years later) and its fair value is assessed to be $400,000. an impairment loss of $40,000 O an impairment loss of $30,000 O $0 of impairment loss O an impairment reversal of $30,000Building A is acquired on 1st January 2012 for RM800,000.00. It was depreciated using straight line method for 20 years. The first two years the company uses the cost model but adopt revaluation model afterwards. Revaluations were conducted every three years. Fair values at the date of revaluation were RM693,000.00 in 2014; RM607,500.00 in 2017 and RM490,000.00 in 2020. Give one example when inventory on hand at the reporting date not measured at cost. Prepare journal entries to record revaluations. Show detailed calculations to support your answer.In 2015, DimDung Company acquired production machinery which now has a book value of ¥745,000. The discounted future cash flows from use of the machinery is ¥400,000 and its fair value less costs to sell is ¥350,000. DimDung has determined that an impairment loss has occurred. What is the carrying value of the machinery after the journal entry to record the impairment loss has been recorded under IFRS? Group of answer choices ¥400,000 ¥395,000 ¥345,000 ¥350,00
- Assume that Bilal company purchased an asset for OMR 10000 on 1 Jan 2014. The company charging OMR 2000 depreciation per annum by following straight-line depreciation method. The company charged total depreciation till 31December 2016 is OMR 6000 and the company decided to sell this asset for OMR 3000 on 31st Mar2017. Calculate the gain or loss on sale of asset. a. OMR 500 loss b. None of the given options C. OMR 1000 loss d. OMR 500 profitABC 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 1 July 2022, Resonante Ltd acquired two assets within the same class of plant and equipment. Information on these assets is as follows. Cost Expected useful life Machine A $200 000 5 years Machine B 120 000 3 years The machines are expected to generate benefits evenly over their useful lives. The class of plant and equipment is measured using fair value. At 30 June 2023, information about the assets is as follows. Fair value Expected useful life Machine A $168 000 4 years Machine B 76 000 2 years On 1 January 2024, Machine B was sold for $58 000 cash. On the same day, Resonante Ltd acquired Machine C for $160 000 cash. Machine C has an expected useful life of 4 years. Resonante Ltd also made a bonus issue of 20 000 shares at $1 per share, using $16 000 from the general reserve and $4000 from the asset revaluation surplus created as a result of measuring Machine A at fair value. At 30 June 2024, information on the machines is as follows. Fair value Expected useful life Machine A $122…