Tangible Non-Current Assets

Metro Utilities owns a headquarters building originally purchased for $2,000,000. Accumulated depreciation to date is $400,000. The company decides to revalue the building to its current market value of $2,500,000. What is the amount to be credited to the revaluation surplus? (Enter the number only, without commas or currency symbols)

SECTION A On 1 January 20X4, Titan Manufacturing Co acquired a specialized heavy-duty press for $800,000. It had an estimated useful life of 10 years and a nil residual value. Titan uses the revaluation model. On 31 December 20X5, the press was revalued to $720,000. On 31 December 20X6, due to a sudden decline in market demand, the press was revalued downwards to $450,000. What amount should be charged to the statement of profit or loss for the year ended 31 December 20X6 regarding the revaluation decrease?

SECTION B - CASE 2: BioHarvest Agri BioHarvest Agri Co operates commercial vineyards. The year-end is 30 September 20X6. BioHarvest uses the revaluation model for its vineyard land. On 1 October 20X4, the land was revalued upwards by $500,000. On 30 September 20X6, due to a change in zoning laws, the land suffered a revaluation deficit of $800,000. How should the $800,000 deficit be recorded in the financial statements for the year ended 30 September 20X6?

**Section A** Cobalt Extraction Co operates a deep-sea mining vessel. The vessel cost $50 million and has a useful life of 20 years. By law, the vessel must undergo a major environmental safety overhaul every 5 years. The estimated cost of the first overhaul is $10 million, which was included in the initial $50 million cost. What is the total depreciation charge for the vessel in its first year of operation?

**Section B - Case 1: Nimbus Renewables** *Scenario:* On 1 January 20X4, Nimbus Renewables began constructing an offshore wind farm. The following costs were incurred: - Materials and components: $10,000,000 - Direct labor: $5,000,000 - Testing the turbines (net of $200,000 from selling power generated during testing): $800,000 - General administrative overheads: $1,200,000 By law, Nimbus must decommission the wind farm at the end of its 20-year useful life. The estimated future cost of decommissioning is $4,000,000. Nimbus uses a discount rate of 5%. The present value of $1 payable in 20 years at 5% is 0.377. Nimbus also leased specialized maintenance vessels on 1 January 20X4 for 5 years. The annual lease payment is $2,000,000 payable in arrears on 31 December. The interest rate implicit in the lease is 6%. The present value of an ordinary annuity of $1 for 5 years at 6% is 4.212. *Question:* What is the initial cost of the wind farm recognized in Property, Plant and Equipment on 1 January 20X4?

**Section B - Case 1: Nimbus Renewables** *Scenario:* On 1 January 20X4, Nimbus Renewables began constructing an offshore wind farm. The following costs were incurred: - Materials and components: $10,000,000 - Direct labor: $5,000,000 - Testing the turbines (net of $200,000 from selling power generated during testing): $800,000 - General administrative overheads: $1,200,000 By law, Nimbus must decommission the wind farm at the end of its 20-year useful life. The estimated future cost of decommissioning is $4,000,000. Nimbus uses a discount rate of 5%. The present value of $1 payable in 20 years at 5% is 0.377. Nimbus also leased specialized maintenance vessels on 1 January 20X4 for 5 years. The annual lease payment is $2,000,000 payable in arrears on 31 December. The interest rate implicit in the lease is 6%. The present value of an ordinary annuity of $1 for 5 years at 6% is 4.212. *Question:* What is the depreciation charge for the wind farm for the year ended 31 December 20X4?