Rahara Ltd purchased a piece of equipment for £600,000 on the Ist January 2021. The equipment is expected to have an economic life of 5 years and will have no residual value. Depreciation is calculated on a straight-line basis over the life of the asset. The company received a government of £200,000 towards the purchase of the equipment. The financial year end of the company is December 31st each year. Required: Show the relevant extracts from the financial statements for the years ended 31/12/21 & 31/12/22 under each of the two allowable methods of presentation.
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- On 1 January 2021, Tymba plc has a building with a carrying value of £500,000 which was purchased on 31 December 2010. The company use revaluation model to subsequently measure the building. Depreciation is charged based on straight line method over 50 years. The building were revalued on 30 May 2021 and it had a fair value of £650,000. Tymba plc makes an annual transfer between the revaluation reserves and retained earnings in accordance with best practice. What is the amount of annual transfer on 31 December 2021?David Ltd commences operations on 1 July 2020 On the same date, it purchases a machine at a cost of $1000 000 The machine is expected to have a useful life of 4 years, with benefits being uniform throughout its life. It will have no residual value at the end of 4 years Hence, for accounting purposes the depreciation expense would be $250 000 per year For taxation purposes, the ATO allows the company to depreciate the asset over three years—that is, $200 000 per year The profit before tax of the company for each of the next four years (years ending 30 June) is $600 000, $700 000, $800 000 and $900 000 respectively The tax rate is 30 per cent. Required: 1. Calculate the taxable profit on 30 June 2021, 30 June 2022, 30 June 2023.2. Record the necessary journal entries.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
- On 1 November 2018, Graceville Ltd purchased an item of property, plant and equipment for $50 000. The terms of the purchase were as follows: $50 000 could be paid within 30 days, or $65 000 in one year’s time. The management of Graceville opted to pay $65 000 in one year’s time. Delivery and handling costs of $4 000 were incurred, as well as engineering fees of $1 200 to ensure that the asset was correctly installed. The asset began operations on 6 January 2019. During January, holding costs of $5 000 were incurred because the asset was operating at less than full capacity. In addition, $900 costs comprising labour and small parts were incurred in day-to-day servicing of the asset. Management of Graceville Ltd uses the revaluation model to account for the asset. Required Prepare any necessary general journal entry(ies) to initially record and measure the asset in accordance with the requirements of AASB 116 ‘Property, Plant and 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…An asset is purchased at a cost of P110 000 on 1 January 2016. The asset has a useful of 10 years. The company expects to sell assets after 5 years for an estimated P30 000 before taking into consideration the expected costs of disposal of P20 000. The straight-line method of depreciation is to be used for this asset. Calculate the depreciation for the year ended 31 October 2016.
- Guru Berhad year end is every 31 December. Guru Berhad acquired a warehouse for RM20 million on 1 October 2012 with an estimated useful life of 25 years. Depreciation charged based on period of ownership. On 1 January 2020, the building was deemed to be impaired as its fair value was estimated to be RM12 million. At that date, the estimated remaining life was revised to 12 years. Advise Guru Berhad on appropriate accounting treatment. You are also required to indicate the depreciation charged during the year ended 31 December 2020.Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470.000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B-Show accounting entries on disposal of the plant on 1 Jan 2022.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.
- XYZ Ltd operate two production lines. One was installed in April 2017 at a cost of €200,000. The other was installed in February 2019 at a cost of €340,000. They charge depreciation using the straight-line method at a rate of 15% pa for an estimated useful economic life of 5 years, charging a full year in the year of acquisition. As at the year ended 31 Dec 2020, the production manager has filed a report noting that the residual value of the production lines is now expected to be only 5% of original cost. The Directors want to reflect this change in the accounts for the year ending 31 Dec 2020. What should be the depreciation charge for the year? €132,200 €140,200 €179,000 €185,000ABC 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.…Your firm bought a machine for £5,000 on 1 January 20X1, when it had a useful life of four years and a residual value of £1,000. Straight-line depreciation is to be applied on a monthly basis. On 31 December 20X3, the machine was sold for £1,600. The amount to be entered in the 20X3 statement of profit or loss for profit or loss on disposal is: