On 1 September 2010 Sowutuom had some old office premises with a carrying amount of GH...

 

Transcribed Image Text:

On 1 September 2010 Sowutuom had some old office premises with a carrying amount of GH 33.6 million. The premises had originally cost GH¢40 million and were being depreciated over their expected useful life of 40 years. On 1 December 2010 Sowutuom relocated to a newly built office complex and decided to dispose of its old premises. Agents were appointed to assist with the sales. The agents advised the directors that the fair market value of the old premises at 1 December 2010 was GH 29 million and a commission of 5% was payable on sale. No entries have yet been made in respect of the old premises for the year ended 31 October 2011. The old premises remained unsold at 31 October 2011, but the sale was finalized on 10 November 2011 for net proceeds of GH 26.2 million. Required Show how the property should be dealt with in the financial statements of Sowutuom for the year ended 31 October 2011. On 1 September 2010 Sowutuom had some old office premises with a carrying amount of GH 33.6 million. The premises had originally cost GH¢40 million and were being depreciated over their expected useful life of 40 years. On 1 December 2010 Sowutuom relocated to a newly built office complex and decided to dispose of its old premises. Agents were appointed to assist with the sales. The agents advised the directors that the fair market value of the old premises at 1 December 2010 was GH 29 million and a commission of 5% was payable on sale. No entries have yet been made in respect of the old premises for the year ended 31 October 2011. The old premises remained unsold at 31 October 2011, but the sale was finalized on 10 November 2011 for net proceeds of GH 26.2 million. Required Show how the property should be dealt with in the financial statements of Sowutuom for the year ended 31 October 2011.

Answer rating: 100% (QA)

To account for the old office premises in the financial statements of Sowutuom for the year ended 31 October 2011 we need to consider the following tr... View the full answer