QUESTION 7 5-Star Bhd is a company involved in the production of modern furniture. The following...

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QUESTION 7 5-Star Bhd is a company involved in the production of modern furniture. The following information is related to property, plant and equipment for the year ended 30 June 2020: Balance as of 1 July 2020: Land RM 12,800,000 6,350,000 Buildings Accumulated Depreciation as of 1 July 2020: Buildings 820,000 Buildings are measured using the cost model. Useful life of buildings is 50 years. Depreciation is recognised in the Statement of Profit or Loss on a straight-line basis over the period of ownership. The land is not depreciated and measured using the revaluation model. 1. On 1 July 2020, the company constructed a new factory building for its business operation. The construction was completed on 31 December 2020. Construction is funded solely through a 10-year loan amounting to RM4,000,000. It is the company's policy to capitalise borrowing costs on qualifying assets. The total interest is RM1,200,000. The company starts using the new factory building after its completion. 2. As of 30 June 2021, the fair value of the land is RM14,700,000. The company had recorded a deficit amounting to RM900,000 on land in prior years. Required: a. Calculate the initial cost of the new factory building in information (1) above. b. Calculate the depreciation of the new factory building and existing building for the year ending 30 June 2021. c. Show journal entries related to land in information (2). QUESTION 7 5-Star Bhd is a company involved in the production of modern furniture. The following information is related to property, plant and equipment for the year ended 30 June 2020: Balance as of 1 July 2020: Land RM 12,800,000 6,350,000 Buildings Accumulated Depreciation as of 1 July 2020: Buildings 820,000 Buildings are measured using the cost model. Useful life of buildings is 50 years. Depreciation is recognised in the Statement of Profit or Loss on a straight-line basis over the period of ownership. The land is not depreciated and measured using the revaluation model. 1. On 1 July 2020, the company constructed a new factory building for its business operation. The construction was completed on 31 December 2020. Construction is funded solely through a 10-year loan amounting to RM4,000,000. It is the company's policy to capitalise borrowing costs on qualifying assets. The total interest is RM1,200,000. The company starts using the new factory building after its completion. 2. As of 30 June 2021, the fair value of the land is RM14,700,000. The company had recorded a deficit amounting to RM900,000 on land in prior years. Required: a. Calculate the initial cost of the new factory building in information (1) above. b. Calculate the depreciation of the new factory building and existing building for the year ending 30 June 2021. c. Show journal entries related to land in information (2).

Answer rating: 100% (QA)

a Initial cost of the new factory building RM4000000 RM1200000 borrowing cost RM5200000 b Deprecia... View the full answer