Property, plant and equipment Ian has provided you with the details of the delivery trucks included in the PPE above, as summarised below: Delivery trucks Urban Swift Metro Mover Total $ $ At cost 114,000 85,000 199,000 Accumulated depreciation - 31 March 2023 (34,200) (4,250) (38,450) Carrying amount – 1 April 2023 79,800 80,750 160,550 Depreciation (11,400) (8,500) (19,900) Carrying amount – 31 March 2024 68,400 72,250 140,650 Remaining useful life as at 1 April 2024 6 years 8.5 years Urban Swift is a Ford F-150 four-door pickup truck with an open cargo at the rear. Ford Australia has stopped producing this model of vehicle and its resale value has improved given the constant demand for this type of truck. Metro Mover is an 18-wheeler truck used for long-distance transport on highways. Both the delivery trucks are depreciated at 10% on a straight-line basis. No acquisitions, disposal or impairment loss occurred during the financial year 2024. Subsequent to their acquisition, all trucks are currently measured using the cost model as provided in AASB 116. The directors of SLSL have decided to adopt the revaluation model as allowed in AASB 116 for Urban Swift from 1 April 2024 given its increased demand. As for Metro Mover, since its value is deteriorating, the directors prefer to retain the cost model for that vehicle. For this purpose, the fair values have been determined to be: Urban Swift Metro Mover Fair value as at $ $ 1 April 2024 72,000 73,525 1 April 2025 61,000 63,000 Upon revaluation, both the trucks would be depreciated on a straight-line basis over their remaining useful lives. Ignore any tax effect arising from the revaluation exercise. Advise the directors if it is possible to adopt the revaluation model for Urban Swift and retain the current cost model for Metro Mover. Support your answers with specific references made to AASB 116. Assume that the directors have decided to adopt the revaluation model for all trucks from 1 April 2024. Based on the information provided, determine if there are any gains or losses on revaluation for the trucks on both 1 April 2024 and 1 April 2025. Advise the directors if any gain on revaluation from one truck can be used to offset any loss on revaluation for the other? Why? Provide specific reference made to AASB 116. Show all relevant journal entries required to record any depreciation and revaluation for the trucks for the revaluation exercises on both 1 April 2024 and 1 April 2025. Explain how professional judgement would have been applied in the above revaluation exercises. (3 marks)

Property, plant and equipment Ian has provided you with the details of the delivery trucks included in the PPE above, as summarised below: Delivery trucks Urban Swift Metro Mover Total $ $ At cost 114,000 85,000 199,000 Accumulated depreciation - 31 March 2023 (34,200) (4,250) (38,450) Carrying amount – 1 April 2023 79,800 80,750 160,550 Depreciation (11,400) (8,500) (19,900) Carrying amount – 31 March 2024 68,400 72,250 140,650 Remaining useful life as at 1 April 2024 6 years 8.5 years Urban Swift is a Ford F-150 four-door pickup truck with an open cargo at the rear. Ford Australia has stopped producing this model of vehicle and its resale value has improved given the constant demand for this type of truck. Metro Mover is an 18-wheeler truck used for long-distance transport on highways. Both the delivery trucks are depreciated at 10% on a straight-line basis. No acquisitions, disposal or impairment loss occurred during the financial year 2024. Subsequent to their acquisition, all trucks are currently measured using the cost model as provided in AASB 116. The directors of SLSL have decided to adopt the revaluation model as allowed in AASB 116 for Urban Swift from 1 April 2024 given its increased demand. As for Metro Mover, since its value is deteriorating, the directors prefer to retain the cost model for that vehicle. For this purpose, the fair values have been determined to be: Urban Swift Metro Mover Fair value as at $ $ 1 April 2024 72,000 73,525 1 April 2025 61,000 63,000 Upon revaluation, both the trucks would be depreciated on a straight-line basis over their remaining useful lives. Ignore any tax effect arising from the revaluation exercise. Advise the directors if it is possible to adopt the revaluation model for Urban Swift and retain the current cost model for Metro Mover. Support your answers with specific references made to AASB 116. Assume that the directors have decided to adopt the revaluation model for all trucks from 1 April 2024. Based on the information provided, determine if there are any gains or losses on revaluation for the trucks on both 1 April 2024 and 1 April 2025. Advise the directors if any gain on revaluation from one truck can be used to offset any loss on revaluation for the other? Why? Provide specific reference made to AASB 116. Show all relevant journal entries required to record any depreciation and revaluation for the trucks for the revaluation exercises on both 1 April 2024 and 1 April 2025. Explain how professional judgement would have been applied in the above revaluation exercises. (3 marks)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Property, plant and equipment

Ian has provided you with the details of the delivery trucks included in the PPE above, as summarised below:

	Delivery trucks
	Urban Swift	Metro Mover	Total
	$	$
At cost	114,000	85,000	199,000
Accumulated depreciation - 31 March 2023	(34,200)	(4,250)	(38,450)
Carrying amount – 1 April 2023	79,800	80,750	160,550
Depreciation	(11,400)	(8,500)	(19,900)
Carrying amount – 31 March 2024	68,400	72,250	140,650
Remaining useful life as at 1 April 2024	6 years	8.5 years

Urban Swift is a Ford F-150 four-door pickup truck with an open cargo at the rear. Ford Australia has stopped producing this model of vehicle and its resale value has improved given the constant demand for this type of truck. Metro Mover is an 18-wheeler truck used for long-distance transport on highways. Both the delivery trucks are depreciated at 10% on a straight-line basis. No acquisitions, disposal or impairment loss occurred during the financial year 2024. Subsequent to their acquisition, all trucks are currently measured using the cost model as provided in AASB 116.

The directors of SLSL have decided to adopt the revaluation model as allowed in AASB 116 for Urban Swift from 1 April 2024 given its increased demand. As for Metro Mover, since its value is deteriorating, the directors prefer to retain the cost model for that vehicle. For this purpose, the fair values have been determined to be:

	Urban Swift	Metro Mover
Fair value as at	$	$
1 April 2024	72,000	73,525
1 April 2025	61,000	63,000

Upon revaluation, both the trucks would be depreciated on a straight-line basis over their remaining useful lives. Ignore any tax effect arising from the revaluation exercise.

Advise the directors if it is possible to adopt the revaluation model for Urban Swift and retain the current cost model for Metro Mover. Support your answers with specific references made to AASB 116.
Assume that the directors have decided to adopt the revaluation model for all trucks from 1 April 2024. Based on the information provided, determine if there are any gains or losses on revaluation for the trucks on both 1 April 2024 and 1 April 2025.
Advise the directors if any gain on revaluation from one truck can be used to offset any loss on revaluation for the other? Why? Provide specific reference made to AASB 116.
Show all relevant journal entries required to record any depreciation and revaluation for the trucks for the revaluation exercises on both 1 April 2024 and 1 April 2025.
Explain how professional judgement would have been applied in the above revaluation exercises. (3 marks)

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here