Question 6 (15 marks)

Chan Ltd reported these Property, Plant and Equipment Assets at 1 July 2015:

Land		$4,000,000
Buildings Less: Accumulated depreciation - Buildings	$8,800,000 (1,100,000)	7,700,000
Equipment Less: Accumulated depreciation - Equipment	1,800,000 (480,000)	1,320,000
Total Property, Plant and Equipment Assets		$13,020,000

Chan Ltd applies the straight-line method of depreciation for buildings and equipment and the rates of depreciation are as follows:

• Buildings are estimated to have a 40 year useful life with no residual value.
• Equipment are estimated to have a 10 year useful life with no residual value.

During the financial year ending 30 June 2016, the following cash transactions occurred:

Date	Transaction
2 July 2015	Purchased land for $900,000.
30 June 2016	Sold equipment that cost $600,000 when purchased on 1 July 2014. The equipment was sold for $380,000. Assume no depreciation adjustments processed up to the date of sale.
30 June 2016	Purchased a building for $3,500,000.

Required:

1. Prepare the necessary journal entries for the purchase, disposal and depreciation adjustments relating to the above-mentioned assets at 30 June 2016. (10 marks)
2. Prepare an extract showing disclosure of Property, Plant and Equipment in the statement of financial position at 30 June 2016. (5 marks)

Type your answer in the template provided.

[Answer here]

a)

Question 5 Part A (15 marks) Chan Ltd General Journal
Date	Account Titles	Dr $	Cr $

[Answer here]

b)