(A) Durine Limited is a company involved in building wind farms in Ireland. The financial controller...

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(A) Durine Limited is a company involved in building wind farms in Ireland. The financial controller has asked you, a newly qualified CPA for some help in correctly accounting for property, plant and equipment (PPE) within the company for the financial year ending 31 December 2015. The following costs have occurred on a wind farm site: Preparation of Site Annual maintenance once operational VAT on materials (recoverable) Staff training on correctly operating the wind farm once operational Import Duty on materials purchased Initial Surveying of site Project manager's salary to build and manage the wind farm Wages of employees to build the wind farm Annual wages of employees once the wind farm is operating Testing costs (c) Materials purchased for wind farm net of VAT Discount received on materials purchased (B) REQUIREMENT: (a) Calculate the amount that should be capitalised as property, plant and equipment for the above wind farm. (5 Marks) 80,000 30,000 120,000 25,000 28,000 40,000 140,000 300,000 100,000 60,000 (b) In accordance with IAS 16- Property, Plant & Equipment explain the accounting treatment allowed for the measurement of PPE: 250,000 33,000 (1) At recognition; (ii) After recognition. In the context of IAS 16- Property, Plant & Equipment: (i) Discuss what is meant by the term 'Fair Value'; (ii) How can the fair value of a building be determined? (3 Marks) (3 Marks) Durine Limited's head office building is the only building it owns. Using professional valuers, it revalued this building on 1 January 2015, at €2,100,000. Durine Limited has adopted a revaluation policy for buildings from this valuation date and has decided that the original useful life of buildings has not changed as a result of the revaluation. The building was acquired on 1 January 2005. The cost of the building on acquisition was €2,500,000 and the accumulated depreciation to the 31 December 2014 amounted to €500,000. The depreciation up to 1 January 2015 was depreciated evenly since acquisition. The professional valuer believes that the residual value on the building would be €600,000 at the end of its useful life. REQUIREMENT: In accordance with IAS 16- Property, Plant & Equipment: (i) How should the depreciable amount of an asset be allocated? (ii) How often should the residual value and the useful life of an asset be reviewed? (iii) Calculate the depreciation amount of the building for the year ending 31 December 2015 based the information provided in the above scenario. (7 Marks) [Total: 20 Marks] (1 Mark) (1 Mark) (A) Durine Limited is a company involved in building wind farms in Ireland. The financial controller has asked you, a newly qualified CPA for some help in correctly accounting for property, plant and equipment (PPE) within the company for the financial year ending 31 December 2015. The following costs have occurred on a wind farm site: Preparation of Site Annual maintenance once operational VAT on materials (recoverable) Staff training on correctly operating the wind farm once operational Import Duty on materials purchased Initial Surveying of site Project manager's salary to build and manage the wind farm Wages of employees to build the wind farm Annual wages of employees once the wind farm is operating Testing costs (c) Materials purchased for wind farm net of VAT Discount received on materials purchased (B) REQUIREMENT: (a) Calculate the amount that should be capitalised as property, plant and equipment for the above wind farm. (5 Marks) 80,000 30,000 120,000 25,000 28,000 40,000 140,000 300,000 100,000 60,000 (b) In accordance with IAS 16- Property, Plant & Equipment explain the accounting treatment allowed for the measurement of PPE: 250,000 33,000 (1) At recognition; (ii) After recognition. In the context of IAS 16- Property, Plant & Equipment: (i) Discuss what is meant by the term 'Fair Value'; (ii) How can the fair value of a building be determined? (3 Marks) (3 Marks) Durine Limited's head office building is the only building it owns. Using professional valuers, it revalued this building on 1 January 2015, at €2,100,000. Durine Limited has adopted a revaluation policy for buildings from this valuation date and has decided that the original useful life of buildings has not changed as a result of the revaluation. The building was acquired on 1 January 2005. The cost of the building on acquisition was €2,500,000 and the accumulated depreciation to the 31 December 2014 amounted to €500,000. The depreciation up to 1 January 2015 was depreciated evenly since acquisition. The professional valuer believes that the residual value on the building would be €600,000 at the end of its useful life. REQUIREMENT: In accordance with IAS 16- Property, Plant & Equipment: (i) How should the depreciable amount of an asset be allocated? (ii) How often should the residual value and the useful life of an asset be reviewed? (iii) Calculate the depreciation amount of the building for the year ending 31 December 2015 based the information provided in the above scenario. (7 Marks) [Total: 20 Marks] (1 Mark) (1 Mark)

Answer rating: 100% (QA)

Part A a Calculate the amount that should be capitalized as property plant and equipment for the wind farm Determine the amount that should be capitalized as property plant and equipment PPE Preparati... View the full answer