ExpertEasy1 markShort Answer
ACCA · Question 56 · Recording transactions and events
Scenario: AgriGrow Co trial balance at 30 Sept 20X6: Revenue $2,500,000; Purchases $1,400,000; Opening Inventory $300,000; Trade Receivables $450,000; Trade Payables $200,000; Allowance for receivables (1 Oct 20X5) $20,000; Plant & Machinery Cost $800,000; Acc. Dep (1 Oct 20X5) $320,000. Adjustments: 1. Closing inventory cost $350,000 (includes damaged items cost $50,000, NRV $30,000). 2. P&M depreciation 20% reducing balance. 3. Allowance for receivables adjusted to 5% of receivables. 4. Accrue unpaid electricity $15,000.
What is the Carrying Amount of Plant & Machinery to be shown in the Statement of Financial Position? (Enter numbers only)
Scenario: AgriGrow Co trial balance at 30 Sept 20X6: Revenue $2,500,000; Purchases $1,400,000; Opening Inventory $300,000; Trade Receivables $450,000; Trade Payables $200,000; Allowance for receivables (1 Oct 20X5) $20,000; Plant & Machinery Cost $800,000; Acc. Dep (1 Oct 20X5) $320,000. Adjustments: 1. Closing inventory cost $350,000 (includes damaged items cost $50,000, NRV $30,000). 2. P&M depreciation 20% reducing balance. 3. Allowance for receivables adjusted to 5% of receivables. 4. Accrue unpaid electricity $15,000.
What is the Carrying Amount of Plant & Machinery to be shown in the Statement of Financial Position? (Enter numbers only)
How to approach this question
Carrying Amount = Cost - Closing Accumulated Depreciation.
Full Answer
Carrying Amount = $800,000 - $416,000 = $384,000. (Alternatively, Opening Carrying Amount $480,000 - Depreciation $96,000 = $384,000).
Common mistakes
Deducting only the opening accumulated depreciation.
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