LesMart pty ltd has an intern accountant who needs your help in recognizing some of the transactions which they still feel a bit confused on their treatment. When assisting, you have to show him on draft how they will recognize them on the financial statements.

There is an asset that was bought two years back at the value of P200,000 depreciated at 20% straight line method on which the entity would like to change the method to diminishing balance. (6 marks)

The company has a two years after service policy on which 15% markup profit is made. In the current year , the cost of the service is P150,000 and those transactions have been included in the revenue (6 marks)

Some items were sold for P600. This items were included in the closing inventory at the cost of 630. There are similar items in the inventory which there is a high probability that they will be sold at the similar price in proportion. Those items are currently recorded at P5,000.( 6 marks)

The two events while preparing the financial statements. The intern needs to be reminded if they are adjusting or non-adjusting events (7 marks)

One of the motor vehicles was in an accident and cannot be repaired

The customer who was included in the receivables amount has been declared bankrupts and will not be able to pay the entity.

Answer rating: 100% (QA)

1 Change in Depreciation Method To change the depreciation method from straight line to diminishing balance the following steps should be taken a Calculate the accumulated depreciation under the strai... View the full answer