Recording of assets State whether or not an asset should be recorded in the balance sheet of
Question:
Recording of assets State whether or not an asset should be recorded in the balance sheet of WXY Ltd as at 30 June 2019 in each of the following situations. State the amount (if any) of the asset, and any assumptions made.
1. On 15 May 2019, XYZ Ltd paid Insurance Ltd $40,000 for an insurance premium. The premium covers losses incurred due to fire, theft or other causes up to 14 May 2020.
2. XYZ Ltd paid $20 000 for a patent in April 2019.
3. XYZ Ltd has just hired a new general manager who is an expert in the business carried on by XYZ Ltd. With the help of this person, the company is expected to increase its annual profits by $700,000. The general manager's salary is $400 000 per annum.
4. XYZ Ltd purchased land in 2012 for $100,000. The market value of this land is $150 000 as at 30 June 2019.
5. Equipment purchased for $2 million and costs an additional $400 000 to install.6Purchased a computer with a sticker price of $3000 but because they were a regular customer XYZ was charged only $2700.
