On 1 January 2021, Polluter Bhd opened a new plant in Penang Island. The following costs...

  

Transcribed Image Text:

On 1 January 2021, Polluter Bhd opened a new plant in Penang Island. The following costs were incurred during January 2021 in respect of the new plant: • invoiced price of the plant RM60 000 000 • direct costs of testing of plant to ensure that it is operating in the manner intended by management RM2 000 000 • proceeds from the sale of the goods produced in testing (as scrap) ( RM600 000) • costs incurred in selling the scrap produced during testing RM100 000 • plant opening function for dignitaries, staff and clients RM1 000 000 From 1 February 2021, the plant was ready to operate in the manner intended by management. The plant incurred an operating loss of RM5 000 000 for the month ended 28 February 2021, primarily due to initial low orders levels due to extending nationwide movement control order (MCO) by Malaysian government. Production levels reached break-even point in early March 2021, and thereafter the plant operated profitably. Environmental legislation requires that the site upon which the plant is developed be rehabilitated by Polluter Limited at the end of the plants useful economic life that has been reliably estimated at 10 years. On 1 January 2021, an environmental restoration provision of RM1 million was, in accordance with MFRS 137, raised in this respect. Required: Calculate the cost of the plant in accordance with MFRS 116- Property, plant and equipment. Briefly support your answer On 1 January 2021, Polluter Bhd opened a new plant in Penang Island. The following costs were incurred during January 2021 in respect of the new plant: • invoiced price of the plant RM60 000 000 • direct costs of testing of plant to ensure that it is operating in the manner intended by management RM2 000 000 • proceeds from the sale of the goods produced in testing (as scrap) ( RM600 000) • costs incurred in selling the scrap produced during testing RM100 000 • plant opening function for dignitaries, staff and clients RM1 000 000 From 1 February 2021, the plant was ready to operate in the manner intended by management. The plant incurred an operating loss of RM5 000 000 for the month ended 28 February 2021, primarily due to initial low orders levels due to extending nationwide movement control order (MCO) by Malaysian government. Production levels reached break-even point in early March 2021, and thereafter the plant operated profitably. Environmental legislation requires that the site upon which the plant is developed be rehabilitated by Polluter Limited at the end of the plants useful economic life that has been reliably estimated at 10 years. On 1 January 2021, an environmental restoration provision of RM1 million was, in accordance with MFRS 137, raised in this respect. Required: Calculate the cost of the plant in accordance with MFRS 116- Property, plant and equipment. Briefly support your answer On 1 January 2021, Polluter Bhd opened a new plant in Penang Island. The following costs were incurred during January 2021 in respect of the new plant: • invoiced price of the plant RM60 000 000 • direct costs of testing of plant to ensure that it is operating in the manner intended by management RM2 000 000 • proceeds from the sale of the goods produced in testing (as scrap) ( RM600 000) • costs incurred in selling the scrap produced during testing RM100 000 • plant opening function for dignitaries, staff and clients RM1 000 000 From 1 February 2021, the plant was ready to operate in the manner intended by management. The plant incurred an operating loss of RM5 000 000 for the month ended 28 February 2021, primarily due to initial low orders levels due to extending nationwide movement control order (MCO) by Malaysian government. Production levels reached break-even point in early March 2021, and thereafter the plant operated profitably. Environmental legislation requires that the site upon which the plant is developed be rehabilitated by Polluter Limited at the end of the plants useful economic life that has been reliably estimated at 10 years. On 1 January 2021, an environmental restoration provision of RM1 million was, in accordance with MFRS 137, raised in this respect. Required: Calculate the cost of the plant in accordance with MFRS 116- Property, plant and equipment. Briefly support your answer On 1 January 2021, Polluter Bhd opened a new plant in Penang Island. The following costs were incurred during January 2021 in respect of the new plant: • invoiced price of the plant RM60 000 000 • direct costs of testing of plant to ensure that it is operating in the manner intended by management RM2 000 000 • proceeds from the sale of the goods produced in testing (as scrap) ( RM600 000) • costs incurred in selling the scrap produced during testing RM100 000 • plant opening function for dignitaries, staff and clients RM1 000 000 From 1 February 2021, the plant was ready to operate in the manner intended by management. The plant incurred an operating loss of RM5 000 000 for the month ended 28 February 2021, primarily due to initial low orders levels due to extending nationwide movement control order (MCO) by Malaysian government. Production levels reached break-even point in early March 2021, and thereafter the plant operated profitably. Environmental legislation requires that the site upon which the plant is developed be rehabilitated by Polluter Limited at the end of the plants useful economic life that has been reliably estimated at 10 years. On 1 January 2021, an environmental restoration provision of RM1 million was, in accordance with MFRS 137, raised in this respect. Required: Calculate the cost of the plant in accordance with MFRS 116- Property, plant and equipment. Briefly support your answer

Answer rating: 100% (QA)

According to MFRS 116 Property Plant and Equipment the cost of an item of property plant and equipme... View the full answer