Entity A is a listed company in Hong Kong selling computer accessories. The draft accounts for...

  

Transcribed Image Text:

Entity A is a listed company in Hong Kong selling computer accessories. The draft accounts for the year ended 31 December 2014 included a motor van with the cost of $986,000 which was bought on 1 January 2012. Its economic life is assumed to be 8 years. However, the market has suddenly turned down on 31 December 2014. As a result, the motor van was estimated that it could only be able to generate $125,000 cash at each year-end of 2015, 2016, 2017, 2018 and 2019 respectively. It will then be scrapped on 31 December 2019 with a scrap value of $12,550. Alternatively, the motor van could be sold immediately on 31 December 2014 for $565,400 and $95,000 selling costs incurred. In addition, the recoverable amounts on 31 December 2015 and 31 December 2016 are estimated as $386,200 and $365,200 respectively. On 1 January 2016, Entity A changed the depreciation method from the straight-line method to the reducing balance method of 20% annually. Eventually, Entity A sold the motor van for $365,400 on 31 December 2017 The discount rate is 12.00%. The end of the reporting period is 31 Dec. REQUIRED: According to the relevant accounting standards, provide all necessary journal entries of Entity A on 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017. ACCOUNTS FOR INPUT: | Road roller | Plant | Machine | Motor van | Land | Building | Inventory | Intangible assets | Bank | | Payable | Receivable | Retained earnings | Other income | Other expense | Interest expense | Interest revenue | | Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Loss on disposal | Gain on disposal | | Restoration liability | Goodwill | Revaluation surplus | Revaluation deficit | No entry | ANSWERS: Journal Entries: Date Account Name Debit ($) Credit ($) Hints For Sequence 31-Dec-14 31-Dec-14 31-Dec-15 31-Dec-15 31-Dec-16 31-Dec-16 31-Dec-17 31-Dec-17 Judge Dr/Cr side. Only Enter Amount. Judge Dr/Cr side. Only Enter Amount. Judge Dr/Cr side. Only Enter Amount. Entity A is a listed company in Hong Kong selling computer accessories. The draft accounts for the year ended 31 December 2014 included a motor van with the cost of $986,000 which was bought on 1 January 2012. Its economic life is assumed to be 8 years. However, the market has suddenly turned down on 31 December 2014. As a result, the motor van was estimated that it could only be able to generate $125,000 cash at each year-end of 2015, 2016, 2017, 2018 and 2019 respectively. It will then be scrapped on 31 December 2019 with a scrap value of $12,550. Alternatively, the motor van could be sold immediately on 31 December 2014 for $565,400 and $95,000 selling costs incurred. In addition, the recoverable amounts on 31 December 2015 and 31 December 2016 are estimated as $386,200 and $365,200 respectively. On 1 January 2016, Entity A changed the depreciation method from the straight-line method to the reducing balance method of 20% annually. Eventually, Entity A sold the motor van for $365,400 on 31 December 2017 The discount rate is 12.00%. The end of the reporting period is 31 Dec. REQUIRED: According to the relevant accounting standards, provide all necessary journal entries of Entity A on 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017. ACCOUNTS FOR INPUT: | Road roller | Plant | Machine | Motor van | Land | Building | Inventory | Intangible assets | Bank | | Payable | Receivable | Retained earnings | Other income | Other expense | Interest expense | Interest revenue | | Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Loss on disposal | Gain on disposal | | Restoration liability | Goodwill | Revaluation surplus | Revaluation deficit | No entry | ANSWERS: Journal Entries: Date Account Name Debit ($) Credit ($) Hints For Sequence 31-Dec-14 31-Dec-14 31-Dec-15 31-Dec-15 31-Dec-16 31-Dec-16 31-Dec-17 31-Dec-17 Judge Dr/Cr side. Only Enter Amount. Judge Dr/Cr side. Only Enter Amount. Judge Dr/Cr side. Only Enter Amount.

Answer rating: 100% (QA)

Figures provided in journal entries are not correct provided wi... View the full answer