Below is a list of assets belonging to Wells (Pty) Ltd.’s fixed asset register for the year ended 31 December
2019.

ASSET	ACQUISITION DATE	COST	USEFUL LIFE
Land	01 May 2010	1,000,000
Building 1	01 January 2019	500,000	20
Building 2	01 June 2018	700,000	20
Vehicle a)	01 November 2019	300,000	5
Vehicle b)	30 June 2020	150,000	5
Vehicle c)	30 June 2020	270,000	5
Furniture and fittings	01 May 2019	300,000	3
Computer equipment	28 February 2020	150,000	3

The following additions occurred during the 2020 financial year:
On 1 January 2020 Wells bought 2 new Toyota Bakkies at a total invoice price of 500 000. The supplier will only be paid on 1 January 2021. These new bakkies are stronger models than the usable for 7 years, but wells intends to sell these assets after 4 years. The financial controller estimates that these bakkies will be able to sell for 250 000 in 4 years’ time.
During the first quarter of a new administrative building was completed at a total cost of 700 000. The building was available and ready for use from 1 April 2020, but due to incorrect interior design and theme, the administrative team only occupied the building on 1 May 2020. Inspection costs expected for the building amounted to 50,000. Expected to be incurred after 24 months.
The building is measured on a revaluation model and accounting policy is to account for revaluation on a net basis. Accumulated depreciation is accounted for on an elimination model. The building's first valuation was on 31 December 2021 with a market value of 550 000.
The only disposal in 2020 was that of building two. Wells believed the building was becoming decapitated and will cost too much to renovate. The building was sold on 30 October 2020 at a price of 300 000
On 01 December 2020, vehicle a) was involved in an accident and fully written off by the insurance company.
Computer equipment had been infected with the virus, and the computers have been slow since, making productivity very low thus reducing economic benefits from the use of the computers.
The computer's market value at hand is 70,000 and it will cost Wells 5000 to sell them off and get new computers.
Computers have not been sold out as of 31 December 2021.

REQUIRED:

A) Prepare journal entries in the books of Wells (Pty) Ltd for the year ended 31 December 2021.

B) Prepare the following notes in the financial statements of Wells Ltd for the year ended 31 December 2020:
• Property, plant, and equipment

Answer rating: 100% (QA)

a 01 Jan 2020Purchase of Toyota Bakeries 500000 Cash Account 500000 01 May 2020No transaction 30 Oct 2020Bank Account 300000 Sale of Building two 3000... View the full answer