Richy Limited has plant that cost R 345 000 on 01 January 2016. Installation and modification costs   R 69 000 (including vat). Transfer costs paid to lawyer amounted to R 20 000. Transport costs for bringing the asset to location amounted to R 20 000. The plant was ready for use on 01 January 2016. The machines were cleared on 01 March 2016 at a cost of R 10 000. Due to the low order levels in April 2016 the plant stood idle. Depreciation is provided over its useful life of 5 years using the straight-line method to a nil residual value. Richy Limited measures plant under the revaluation model.

The plant was revalued as follows:

• 31 December 2016 R 310 000
• 31 December 2017 R 300 000
• 31 December 2018 R 250 000

Richy Limited transfers the maximum amount from the realized portion of the revaluation surplus to equity. VAT must be calculated at 15%.

Required:

Disclose the above information in the notes to the financial statements for years ending 2016, 2017 and 2018. (Include in your answer the journal entries that must be recorded in the journal.)

Answer rating: 100% (QA)

Journal Entries 01012016 Plant Dr R 60000 Input Vat Dr R 9000 Plant Dr R 20000 Plant Dr R 20000 To P... View the full answer