7 QUESTION 1A. Your friend has just been appointed as a director of a company. He is puzzled as to theaccounting treatment of some of the company's property, plant and equipment, whichhe thinks does not make sense. He said, for example, the value of a property acquired10 years ago for RM500,000 is now carried in the statement of financial statement at alower amount of RM400,000, when in fact the true value should have increased to reflectthe current market value.Required:Explain to your friend the principal requirements of MFRS 116 Property, Plant andEquipment in relation to the measurement model of property, plant and equipment,including its subsequent treatment.

The principal requirements of MFRS 116 and the measurement model of P P E and its subsequent…

Required: Explain to your friend the principal requirements of MFRS 116 Property, Plant and Equipment in relation to the measurement model of property, plant and equipment, including its subsequent treatment.

Required: Explain to your friend the principal requirements of MFRS 116 Property, Plant and Equipment in relation to the measurement model of property, plant and equipment, including its subsequent treatment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

You are the accountant of Entity X. The board of directors asked you for an advice because they feel like the company’s financial statements do not properly reflect the company’s financial position. The board noted out that the company’s properties (i.e., land) are absurdly stated at their historical cost. The properties were acquired 50 years ago and the market prices of the properties have more than tripled since then. In providing your professional advice, you will most certainly quote the provisions of which standard? (Provide the standard number. Follow this format in providing your answer: IAS 1 or IFRS 3)Thanks
S (Presentation of Property, Plant, and Equipment) Carol Keene, corporate comptroller for Dumaine Industries, is trying to decide how to present “Property, plant, and equipment” in the balance sheet. She realizes that thestatement of cash flows will show that the company made a significant investment in purchasing new equipment this year, but overall she knows the company’s plant assets are rather old. She feels that she can disclose one figure titled “Property, plant, and equipment, net of depreciation,” and the result will be a low figure. However, it will not disclose the age of the assets. If she chooses to show the cost less accumulated depreciation, the age of the assets will be apparent. She proposes the following. Check the following image InstructionsAnswer the following questions.(a) What are the ethical issues involved?(b) What should Keene do?
PROBLEM 4: You are the senior auditor in charge for the annual audit of Samal Corp. for the year ended December 31, 2020. You checked mostly the information in the financial records for this small/medium entity and was highly satisfied. You noticed however, that the property account consisted of land which was acquired on January 1, 2018 together with eight identical buildings equally built on it. The initial purchase price was P48,000,000, thirty percent of which is attributable to the land. The eight buildings were estimated to have a 50 years as economic lives of which two of them were used for general and administrative offices while the rest were leased out to independent parties under operating lease arrangements. The following costs were also incurred during acquisition: Non-refundable transfer taxes paid to government 3,000,000 Title insurance and legal fees attributable to the acquisition 1,000,000 Actual borrowing costs 220,000 Marketing and advertisements 100,000 Office…
The Spinach Corporation just purchased an expensive piece of equipment. Assume that the firm planned to depreciate the equipment over 5 years, but then the taxation office passed a provision that requires the company to depreciate the equipment over 7 years. Which of the following will occur as a result of this new law? Select one: a. cash position will improve b. net income will be lower c. operating income, or EBIT, will increase d. taxable income will be lower
6. a. A business worth $ 900,000 purchased on land with an appraised value of $ 750,000 for property taxes. Ten years later, the parcel has an estimated value of $ 1,200,000 and the company receives an offer of $ 2,000,000 for it. Should I now increase the monetary amount allocated to land in business records? yes. Assuming that the land acquired in (a) was sold for $ 2,125,000, how would the various elements of the accounting equation be affected?
Question 1. Trancor Ltd has been in operation for over 60 years. It has a standard straight-line depreciation policy for all its fixed assets. A new CFO was appointed in January 2020 and after review of the financial statements questioned the large write off of assets in December 2019. The Accountant stated these assets were computers and were not being used as the technology was obsolete. New computers were purchased on March 1, 2019 to replace the old ones and these were being depreciated over 5 years using the current policy. The CFO after discussion with management agreed that the reducing balance method at a rate of 30% per annum is more suitable for the computers and instructed the Accountant to make the changes to the depreciation policy. This change meets the requirements of a change in accounting policy. The scrap value of the computers is $5,000. The Balance Sheet extract for December 31, 2019 was as follows: Computers at cost 80,000 Accumulated…
Question 1. Trancor Ltd has been in operation for over 60 years. It has a standard straight-line depreciation policy for all its fixed assets. A new CFO was appointed in January 2020 and after review of the financial statements questioned the large write off of assets in December 2019. The Accountant stated these assets were computers and were not being used as the technology was obsolete. New computers were purchased on March 1, 2019 to replace the old ones and these were being depreciated over 5 years using the current policy. The CFO after discussion with management agreed that the reducing balance method at a rate of 30% per annum is more suitable for the computers and instructed the Accountant to make the changes to the depreciation policy. This change meets the requirements of a change in accounting policy. The scrap value of the computers is $5,000. The Balance Sheet extract for December 31, 2019 was as follows: Computers at cost 80,000 Accumulated…
30. A taxpayer engaged in the practice of his profession bought a brand-new motor vehicle in the amount of Php 5 Million. Which is FALSE? S1: Depreciation expense can be claimed if the asset shall be used in business. S2: The motor vehicle, if used in business, shall be classified as an ordinary asset. Group of answer choices d. Both are true b. Only S2 is false c. Both are false a. Only S1 is false
A. Land with an assessed value of $750,000 for property tax purposes is acquired by a business for $900,000. Ten years later, the plot of land has an assessed value of $1,200,000 and the business receives an offer of $2,000,000 for it. Assuming that the land acquired in (A) was sold for $2,125,000, how would the various elements of the accounting equation be affected?
What accounting assumption, principle, or constraint would Target Corporation use in each of the situations below? a. Target was involved in litigation over the last year. This litigation is disclosed in the financial statements. b. Target allocates the cost of its depreciable assets over the life it expects to receive revenue from these assets. c. Target records the purchase of a new Dell PC at its cash equivalent price.
19. A taxpayer engaged in the practice of his profession bought a brand-new motor vehicle in the amount of Php 5 Million. Which is FALSE? S1: Depreciation expense can be claimed if the asset shall be used in business. S2: The motor vehicle, if used in business, shall be classified as an ordinary asset. Group of answer choices d. Both are true b. Only S2 is false a. Only S1 is false c. Both are false
Write a report to management by carefully analyzing the following comments made by the Finance Manager of Combo Company Limited, a listed company with a total net worth of GH¢ 25,000,000.00. Your position should be supported by the relevant accounting standard, convention, and concept.i. “The depreciation of a motor vehicle is charged on a straight-line basis but after some years of the asset usage, I notice that the efficiency of the asset has reduced, but the same amount of depreciation amount is charged and that reduces profit level. So, let us change from straight line to reducing balance method which to him is fair”ii. The company bought two needles at the cost of GH¢1.00 each. The Finance Manager said “this is an acquisition of non-current asset (equipment) which should be recorded in the asset register and depreciated in line with equipment depreciation policy”iii. “Our customers have proved to be trustworthy for the years the company has dealt with them, so to me, making…