Recording Transactions: Tangible Assets

Section A Titanium Smelting Co purchased a factory on 1 January 20X1 for $2,000,000. It had an estimated useful life of 40 years and zero residual value. On 31 December 20X5, the factory was revalued to $2,400,000. What is the balance on the revaluation surplus account immediately after the revaluation?

Section A EcoTransit operates a fleet of electric buses. A bus was purchased on 1 January 20X2 for $120,000 with a 10-year useful life and no residual value (straight-line depreciation). On 1 January 20X5, management revised the total useful life to 8 years from the date of purchase, with a revised residual value of $6,000. What is the depreciation charge for the year ended 31 December 20X5? (Enter the number only)

Section A DeliveryCo traded in an old van for a new one. The old van originally cost $40,000 and had accumulated depreciation of $28,000. The new van has a list price of $50,000. The dealer gave a part-exchange allowance of $15,000 for the old van, and DeliveryCo paid the remaining $35,000 in cash. What is the profit or loss on disposal of the old van?

Section B - Case 2: Single Entity Accounts **Scenario: AquaHarvest Marine Farms** AquaHarvest prepares its financial statements for the year ended 30 September 20X6. The draft profit before adjustments is $120,000. Issue 1: A payment for marine insurance of $6,000 for the year ending 31 December 20X6 was recorded entirely as an expense in the P&L. Issue 2: Depreciation on harvesting equipment (Cost $80,000, Acc Dep $30,000) needs to be charged at 20% reducing balance. Issue 3: A customer went bankrupt owing $2,500. This needs to be written off. Issue 4: A suspense account has a $4,500 Credit balance because a cash receipt of $4,500 from a credit customer was only recorded in the cash book. Regarding Issue 2, calculate the depreciation charge for the year on the harvesting equipment. (Enter the number only)

Section B - Case 2: Single Entity Accounts **Scenario: AquaHarvest Marine Farms** AquaHarvest prepares its financial statements for the year ended 30 September 20X6. The draft profit before adjustments is $120,000. Issue 1: A payment for marine insurance of $6,000 for the year ending 31 December 20X6 was recorded entirely as an expense in the P&L. Issue 2: Depreciation on harvesting equipment (Cost $80,000, Acc Dep $30,000) needs to be charged at 20% reducing balance. Issue 3: A customer went bankrupt owing $2,500. This needs to be written off. Issue 4: A suspense account has a $4,500 Credit balance because a cash receipt of $4,500 from a credit customer was only recorded in the cash book. What is the carrying amount of the harvesting equipment to be shown in the statement of financial position at 30 September 20X6? (Enter the number only)

Section B - Case 2: Single Entity Accounts **Scenario: AquaHarvest Marine Farms** AquaHarvest prepares its financial statements for the year ended 30 September 20X6. Issue 2: Depreciation on harvesting equipment needs to be charged at 20% reducing balance. If AquaHarvest decides next year to change its depreciation method for this equipment from reducing balance to straight-line, how is this change classified under IAS 8?

Section A SteelForge Heavy Industries purchased a blast furnace on 1 January 20X2 for $5,000,000. It has an estimated useful life of 20 years and a residual value of $200,000. On 31 December 20X5, due to new environmental regulations, the furnace was assessed for impairment. Its fair value less costs to sell is $3,800,000 and its value in use is $3,950,000. What is the impairment loss to be recognized in the year ended 31 December 20X5?

Section A A company disposes of a delivery van. The van originally cost $30,000 and had accumulated depreciation of $18,000 at the date of disposal. The van was traded in for a new model. The new van has a list price of $40,000, and the dealer gave a part-exchange allowance of $15,000 for the old van. What is the profit or loss on disposal of the old van?

Section A An organic farm purchased a tractor for $60,000 on 1 July 20X1. It is depreciated at 20% per annum using the reducing balance method. What is the depreciation charge for the year ended 31 December 20X3? (Assume a full year's depreciation is charged in the year of acquisition).

Section A Which of the following would NOT be included in the cost of a newly acquired piece of manufacturing machinery?

Section B - Case 2 Scenario: EcoBuild Ltd is preparing financial statements for the year ended 30 September 20X6. Draft profit before tax is $450,000. Adjustments required: 1) A machine costing $120,000 bought on 1 April 20X6 was incorrectly expensed in full. Depreciation is 20% straight-line (pro-rata). 2) Closing inventory was undervalued by $15,000. 3) An allowance for receivables of $8,000 needs to be created. 4) Rent of $12,000 paid for the quarter ending 30 November 20X6 was fully expensed. Calculate the correct depreciation expense for the machine for the year ended 30 September 20X6 (in $).