Question 3: Part 1: On 1 Jan 2021 Co A acquires equipment for its manufacturing plant...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 3: Part 1: On 1 Jan 2021 Co A acquires equipment for its manufacturing plant and receives a government grant of £200,000 towards its cost. The equipment costs £800,000 and has a useful life of five years. Its residual value is nil. It is depreciated on a straight- line basis. Requirement: Explain how the grant will be dealt with in the financial statements and show workings and relevant entries in Income Statement and Balance sheet for the year ended 31 Dec 2021 if: (i) the grant is treated as deferred income (ii) the grant is deducted from the cost of the asset. Q3: Part 2 Borrowing (a) Define the term "borrowing costs' and explain the accounting treatment of such costs which is required by international standard IAS23. (b) During the year to 31 December 2013, a company started work on the construction of a manufacturing plant and incurred expenditure as follows: 1 April 2013 1 August 2013 1 December 2013 All of these payments were made out of general borrowings. Construction work was still underway at 31 December 2013. The company had the following general borrowings outstanding throughout the year 2013: Loan A Loan B Loan C Amount of loan £000 £000 1,500 2,400 1,800 10,000 8,000 5,000 Interest for the year £000 1,150 720 430 Calculate the amount of borrowing costs that should be capitalised in relation to the construction of the manufacturing plant during the year. Q3: Part 2 Borrowing (a) Define the term "borrowing costs' and explain the accounting treatment of such costs which is required by international standard IAS23. (b) During the year to 31 December 2013, a company started work on the construction of a manufacturing plant and incurred expenditure as follows: 1 April 2013 1 August 2013 1 December 2013 All of these payments were made out of general borrowings. Construction work was still underway at 31 December 2013. The company had the following general borrowings outstanding throughout the year 2013: Loan A Loan B Loan C Amount of loan £000 £000 1,500 2,400 1,800 10,000 8,000 5,000 Interest for the year £000 1,150 720 430 Calculate the amount of borrowing costs that should be capitalised in relation to the construction of the manufacturing plant during the year. Q3: Part 3 PPE Co D acquires a plant for £600,000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470,000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B - Show accounting entries on disposal of the plant on 1 Jan 2022. Question 3: Part 1: On 1 Jan 2021 Co A acquires equipment for its manufacturing plant and receives a government grant of £200,000 towards its cost. The equipment costs £800,000 and has a useful life of five years. Its residual value is nil. It is depreciated on a straight- line basis. Requirement: Explain how the grant will be dealt with in the financial statements and show workings and relevant entries in Income Statement and Balance sheet for the year ended 31 Dec 2021 if: (i) the grant is treated as deferred income (ii) the grant is deducted from the cost of the asset. Q3: Part 2 Borrowing (a) Define the term "borrowing costs' and explain the accounting treatment of such costs which is required by international standard IAS23. (b) During the year to 31 December 2013, a company started work on the construction of a manufacturing plant and incurred expenditure as follows: 1 April 2013 1 August 2013 1 December 2013 All of these payments were made out of general borrowings. Construction work was still underway at 31 December 2013. The company had the following general borrowings outstanding throughout the year 2013: Loan A Loan B Loan C Amount of loan £000 £000 1,500 2,400 1,800 10,000 8,000 5,000 Interest for the year £000 1,150 720 430 Calculate the amount of borrowing costs that should be capitalised in relation to the construction of the manufacturing plant during the year. Q3: Part 2 Borrowing (a) Define the term "borrowing costs' and explain the accounting treatment of such costs which is required by international standard IAS23. (b) During the year to 31 December 2013, a company started work on the construction of a manufacturing plant and incurred expenditure as follows: 1 April 2013 1 August 2013 1 December 2013 All of these payments were made out of general borrowings. Construction work was still underway at 31 December 2013. The company had the following general borrowings outstanding throughout the year 2013: Loan A Loan B Loan C Amount of loan £000 £000 1,500 2,400 1,800 10,000 8,000 5,000 Interest for the year £000 1,150 720 430 Calculate the amount of borrowing costs that should be capitalised in relation to the construction of the manufacturing plant during the year. Q3: Part 3 PPE Co D acquires a plant for £600,000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470,000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B - Show accounting entries on disposal of the plant on 1 Jan 2022.
Expert Answer:
Related Book For
Posted Date:
Students also viewed these business communication questions
-
Income statement and balance sheet data for Great Adventures, Inc., are provided below. As you can tell from the financial statements, 2014 was an especially busy year. Tony and Suzie were able to...
-
The 2017 comparative income statement and balance sheet of Flowell Design Ltd. follow: Flowell Design Ltd. had no non-cash financing and investing transactions during 2017. During the year, there...
-
Requirement a Prepare a partial income statement and balance sheet for Zillow, Inc under each of the inventory valuation methods Begin by selecting the labels and enter the amounts to complete the...
-
The monthly earnings of financial analysts are normally distributed with a mean of $5,700. If only 6.68 % of the financial analysts have a monthly income of more than $6,140, what is the value of the...
-
A new factory at Arcata requires an initial outlay of $4.5 million to be paid immediately. The factory will last for eight additional years, after which it can be sold for a salvage value of...
-
Decide on a publicly traded company and find their latest annual report on its website. Often under the investor relations tab or section, Write a paper by giving the following questions: - What did...
-
Which depreciation method is generally preferable for income tax purposes? Why? a. Straight-line, because it is simplest b. Units-of-production, because it best tracks the assets use c....
-
On January 2, 2015, the Matthews Band acquires sound equipment for concert performances at a cost of $65,800. The band estimates it will use this equipment for four years. It estimates that after...
-
The plate distorts as shown by the dashed lines. ( Figure 1) The dimensions are L = 430 mm, H=355 mm, d = 3 mm, d2 = 5 mm, d3 = 10 mm, d = 9 mm, d5 = 1 mm, and d6 = = 7 mm. Determine the shear strain...
-
Name the bones of the pectoral girdle and upper limb?
-
You are near completion of the audit of Specter Inc. and the audit work will be completed by February 22, 2022, except for any adjustments related to the responses from the company's lawyers to the...
-
List and briefly explain the different types of the time series data variations.
-
List the 10 most important questions on the site selection worksheet.
-
What is target market? And what is target consumer? And what roles do they play in marketing?
-
What are the differences between return on investment ratio (ROIR) and return on equity ratio (ROE)?
-
Briefly explain what marketing research entails.
-
The triangular plate in Fig. 6-20 carries a 140-N load 1200 mm from the left vertex on the bisector of that vertex angle. T, T, and 7, are the tensile loads in three vertical supporting wires. What...
-
A bubble-point liquid feed is to be distilled as shown in Figure. Use the Edmister group method to estimate the mole-fraction compositions of the distillate and bottoms. Assume initial overhead and...
-
A major television manufacturer has determined that its 40-inch LED televisions have a mean service life that can be modeled by a normal distribution with a mean of six years and a standard deviation...
-
List some common reasons for redesigning layouts.
-
The first unit of a job took 40 hours to complete. The work has a learning percentage of 88. The manager wants time estimates for units 2, 3, 4, and 5. Develop those time estimates.
-
Find the distance s and the force F on the seesaw fulcrum shown in the figure. Assume that the system is in equilibrium. 20 lb ks- F -24 ft- 10 lb
-
A jet airplane is climbing at a constant airspeed in nowind conditions. The plane is directly over a point on the ground that is 4 statute miles from the takeoff point and the altimeter reads 15 840...
-
The airplane in Problem 6 starts from a brakeslocked position on the runway. The airplane takes off at an airspeed of 200 fps. Find the time for the aircraft to reach takeoff speed.
Study smarter with the SolutionInn App