ABC Ltd bought a property for office accommodation on 3 January 20X1 for $33m. The land component of the property was on a 60-year lease and was valued at $3m, the balance being the value of the building. The estimated useful life of the building was 30 years and the residual value was expected to be insignificant. On 1 January 20X2, the estimated useful life of the building was revised to 20 years from that date. This was considered to be more realistic estimate as the management’s intention was to construct a larger building on the site. On 1 January 20X3, ABC Ltd decided to revalue the property to $54m, out of which land was valued at $6.5m. Since then, there has not been material change in the fair value of the property. On 10 December 20X4, the property was sold for $60m. It is the company’s policy to provide for a full year’s depreciation on fixed assets in the year of purchase and none in the year of sale.

Required: 

a). Complete the schedule as provided to calculate the depreciation/amortization and carrying amount.
b). Complete the journal entries as provided to record the above transactions.
c). Complete the extracts of financial statement as provided for financial years 20X1, 20X2 and 20X3.

Answer rating: 100% (QA)

Debit Credit Amount Amount 112011 Land Ac Dr 3000000 Building Ac Dr 30000000 To Cash ac 33000000 Being asset purchased 311211 Depreciation ac Dr 10000... View the full answer