1 FRK 100 PROPERTY, PLANT & EQUIPMENT SOLUTIONS 2013 PROPERTY, PLANT AND EQUIPMENT – ADJUSTMENTS Question 4 pg 344: No 4. Total accumulated depreciation should be R19 000 (not R80 000) Question 9 p.348: 3 rd paragraph must read: “On 1 April 20X1, ABC Dealers purchased a Ford truck for R136 800 and a forklift for R102 600 cash” 4 th paragraph must read: “On 1 June 20X1, ABC Dealers sold the Ford truck for R125 400 cash. P 249: Required: 1. “Calculate the purchase price of the Datsun truck.” 2. “Prepare the journal entries (cash transactions included) necessary to account for the transactions and year end adjustments in the general journal of ABC Dealers for the year ended 31 December 20X1.” Question 10 p.349: Number 3, must read: “R20 000 was received as a trade-in on another vehicle that had initially been purchased on 1 July 20X3. Question 13 p.353: Number 3 must read: “Indicate how trade debtors would be disclosed in the statement of financial position of BAC as at …..” Question 14 pg 353: No.2 Depreciation on this class of asset must still be written off at 20% per annum …(rest of sentence is correct)
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CHAPTER 11 – PROPERTY, PLANT AND EQUIPMENT PLANT AND EQUIPMENT ... No 4. Total accumulated depreciation should be R19 000 ... CHAPTER 11 – PROPERTY, PLANT AND EQUIPMENT.
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PROPERTY, PLANT AND EQUIPMENT – ADJUSTMENTS Question 4 pg 344: No 4. Total accumulated depreciation should be R19 000 (not R80 000) Question 9 p.348: 3rd paragraph must read: “On 1 April 20X1, ABC Dealers purchased a Ford truck for R136 800 and a forklift for R102 600 cash” 4th paragraph must read: “On 1 June 20X1, ABC Dealers sold the Ford truck for R125 400 cash. P 249: Required: 1. “Calculate the purchase price of the Datsun truck.” 2. “Prepare the journal entries (cash transactions included) necessary to account for the transactions and year end adjustments in the general journal of ABC Dealers for the year ended 31 December 20X1.” Question 10 p.349: Number 3, must read: “R20 000 was received as a trade-in on another vehicle that had initially been purchased on 1 July 20X3. Question 13 p.353: Number 3 must read: “Indicate how trade debtors would be disclosed in the statement of financial position of BAC as at …..” Question 14 pg 353: No.2 Depreciation on this class of asset must still be written off at 20% per annum …(rest of sentence is correct)
Sum of digits method 5 + 4 + 3 + 2 + 1 = 15 parts Year Calculation Depreciation 20X1 20X2 20X3 20X4 20X5
5/15 x 495 000 x 10/12 5/15 x 495 000 x 2/12 4/15 x 495 000 x 10/12 4/15 x 495 000 x 2/12 3/15 x 495 000 x 10/12 3/15 x 495 000 x 2/12 2/15 x 495 000 x 10/12 2/15 x 495 000 x 2/12 1/15 x 495 000 x 10/12
R 137 500
27 500
110 000 137 500
22 000 82 500
104 500
16 500 55 000 71 500
11 000 27 500 38 500
Production unit method 495 000 / 900 000 = 55 cents per unit Period Units Depreciation Acc. depr.
QUESTION 2 SUGGESTED SOLUTION BUCK TRADERS 86 000 - 6 000 = 50 cents per kilometer 160 000 Period Kilometers Tariff Depreciation Accumulated
depreciation
20x1 20x2 20x3 20x4 20x5 20x6
20 000 30 000 45 000 25 000 35 000 15 000
50 cents
R 10 000 15 000 22 500 12 500 17 500 2 500
R 10 000 25 000 47 500 60 000 77 500 80 000
Adjustment QUESTION 3 SUGGESTED SOLUTIONS 1. Cost Price = X Cost price – residual value x Number of years passed = Accumulated depreciation Useful life Asset was purchased on 1 January 20X1. Accumulated depreciation on 1 January 20X3 (2 years later) = 6 000 (X – 0,1X) x 2 = 6 000 3 X = 10 000 The cost price of the asset is R10 000
39 200 39 200 Note: Entries in bold are not required in this question but given for completeness sake. QUESTION 6 SUGGESTED SOLUTION FACTORY LIMITED Calculation Original
QUESTION 9 SUGGESTED SOLUTION Question 9 p.348: 3rd paragraph must read: “On 1 April 20X1, ABC Dealers purchased a Ford truck for R136 800 and a forklift for R102 600 cash” 4th paragraph must read: “On 1 June 20X1, ABC Dealers sold the Ford truck for R125 400 cash. P 249: Required: 1. “Calculate the purchase price of the Datsun truck.” 2. “Prepare the journal entries (cash transactions included) necessary to account for the transactions and year end adjustments in the general journal of ABC Dealers for the year ended 31 December 20X1.” ABC DEALERS 1. During the year a Ford truck was sold and an old forklift was scrapped.
- A Datsun truck was purchased. - A new forklift was purchased. - There were no other assets.
Thus: the carrying amount on 31 December 20X1 consist of the carrying amount of the Datsun truck and the new forklift. New forklift: Cost price: (R153 900 x 100/114) = R135 000 Accumulated depreciation: (R135 000 x 33.3% x 3/12) = R11 250 Carrying amount (R135 000 – R11 250) = R123 750 Carrying amount on 31 December 20X1 was R241 250 (given). Thus: The carrying amount of the Datsun truck is: R241 250 – R123 750 = R117 500 Determine the cost price of the Datsun truck (short method): R117 500 x 100/85* = R138 235 this is the cost price to ABC Dealers *85 (100 – (20 x 9/12) Determine the purchase price: The purchase price is the cost price + VAT R138 235 x 114/100 = R157 588
QUESTION 10 SUGGESTED SOLUTION V LISTER Calculations R28 000 – (5% x 28 000) = R26 600 at 25% per year = R6 650 per year Vehicles sold 02/01/19X9 31/12/19X9 31/12/20X0 31/12/20X1 31/12/20X2 01/07/20X3
Cost price R
28 000
Depreciation R
- 6 650 6 650 6 650 6 650
-
Accumulated depr
R -
6 650 13 300 19 950 26 600
- R32 000 – (5% x 32 000) = R30 400 at 25% per year = R7 600 per year 01/07/20X3 31/12/20X3
32 000
-
3 800
6/12
-
3 800 01/09/20X4 5 067 8/12 8 867
R
2. 31/12/20X2 Sold
58 000 (28 000) 30 000
Accumulated Depreciation Sold
45 350 (26 600) 18 750
25% per year on R(30 000 – [5% x 30 000]) = R7 125 per year. R18 750 7 125 = 2,63 Vehicle is 2 years and 8 months old (rounded). Purchase date - 1 May 20X0 (31/12/20X2 - 31/12/20X1 - 31/12/20X0 - 1/5/20X0)
2. ROOLEI NOTES FOR THE YEAR ENDED 30 JUNE 20X6 x. Property, plant and equipment
Land Buildings Total R R R Carrying amount – begin of year
500 000 3 500 000
Cost price 500 000 4 500 000 Accumulated depreciation (1 000 000) Movement during the year
250 000
483 951
Revaluation 250 000 700 000 Depreciation (216 049) Carrying amount – end of year
750 000
3 983 951
Revalued amount 750 000 4 200 000 Accumulated depreciation (216 049) Land and building was revalued on 1 July 20X5 by an independent professional valuer. If land and building was accounted for on the cost price method, the carrying amount would be as follows:
R Land 500 000 Buildings 3 320 000 3 820 000 Calculation: Carrying amount according the cost price model R Land at cost 500 000 Buildings at carrying amount 3 320 000 - cost 4 500 000 - accumulated depreciation 30/6/20X5 (1 000 000) - depreciation 1/7/20X5 to 30/6/20X6 (180 000) (R4 500 000 / 25 years) 3 820 000 . QUESTION 12 SUGGESTED SOLUTION
NOTES FOR THE YEAR ENDED 28 FEBRUARY 20X7 x. Property, plant and equipment
Total Land Buildings R R R Carrying amount – begin of year
5 560 000
1 800 000
3 760 000
Cost price 6 500 000 1 800 000 4 700 000 Accumulated depreciation (940 000) - (940 000) Movement during the year
3 258 750
1 300 000
1 958 750
Revaluation 3 640 000 1 300 000 2 340 000 Depreciation (381 250) - (381 250) Carrying amount – end of year
8 818 750
3 100 000
5 718 750
Revalued amount 9 200 000 3 100 000 6 100 000 Accumulated depreciation (381 250) - (381 250) Land and building was revalued on 1 March 20X6 by an independent professional valuer. If land and building was accounted for on the cost price method, the carrying amount would be as follows:
QUESTION 14 Question 14 pg 353: No.2 Depreciation on this class of asset must still be written off at 20% per annum …(rest of sentence is correct) SUGGESTED SOLUTION DIPPENAAR TRADERS 1. General journal DT CT 20X5 Jul
Land Revaluation surplus
13 500
13 500
Accumulated depreciation: Buildings (1) Buildings
52 500
52 500
Buildings Revaluation surplus (2)
22 500
22 500 Calculations: 1. Purchase price = X Land = 0,6X Buildings = 0,4X Accumulated depreciation - Buildings (0,4X/30 x 4,5) [4,5 = years passed] 0,6X + 0,4X - (0,4X/30 x 4,5) = 822 500 X = 875 000 Cost price of land: 875 000 x 0,6 = 525 000 Cost price of buildings: 875 000 x 0,4 = 350 000 Accumulated depreciation - Buildings: 350 000/30 x 4,5 = 52 500 2. 13 500/37,5 x 62,5 = 22 500 1. Cost price – carrying amount = accumulated depreciation
R150 000 – R87 000 = R63 000 Depreciation – Year 1 (150 000 – 15 000) x 20% = 27 000 Depreciation – Year 2 (150 000 – 15 000 – 27 000) x 20% = 21 600 Depreciation – Year 3
(14 400/1 440) = 10 The machine is 2 years and 10 months old. Purchase date: 1 September 20X3 3. DIPPENAAR TRADES Notes for the year ended 30 June 20X6 Property, plant and equipment Land Buildings Vehicles Machinery Total R R R Carrying amount – beginning of year
525 000
297 500
80 329
87 000
989 829
Cost 525 000 350 000 120 000 150 000 1 145 000 Acc. depreciation - (52 500) (39 671) (63 000) (155 171) Movements during the year
13 500
9 951
(14 971)
(18 000)
(9 520)
Revaluation 13 500 22 500 - - 36 000 Depreciation - (12 549) (14 971) (18 000) (45 520 Carrying amount – end of the year
538 500
307 451
65 358
69 000
980 309
Revalued amount 538 000 320 000 - - 858 500 Cost - - 120 000 150 000 270 000 Acc. depreciaton - (12 549) (54 642) (81 000) (148 191) Land and building was revalued on 1 July 20X5 by an independent professional valuer. If land and building was accounted for on the cost price method, the carrying amount would be as follows:
R Land 525 000 Buildings (R350 000 x (24,5/30) 285 833
810 833 Calculations part 3: Cost price of vehicle = X Determine the accumulated depreciation on 30 June 20X5: Accumulated depreciation = X -20 000 x 158 684 400 000 = 0,39671X – 7394,2 Cost price – Accumulated depreciation = Carrying amount
R615 600/50 x 6/12 = R6 156 Carrying amount on 1 July 20X8: (R615 600 – R6 156) = R609 444 Net replacement value: R609 444 + R12 400 = R621 844
4. Depreciation on buildings – 30 June 20X9: 621 844/49,5 = 12 563 (Total useful life is 50 years, ½ year already passed, remaining useful life = 49,5)
5. Vehicles Cost price per vehicle Residual
value R
R A 20 700/3 = 6 900 x 100/30 = 23 000
3 000
26 000 B 18 900/3 = 6 300 x 100/30 = 21 000
3 000
24 000 C 11 250/1,5 = 7 500 x 100/30 = 25 000
5 000
30 000 80 000 D Balancing figure 35 000 Given 115 000
6. Vehicles sold Vehicles Cost price per vehicle Residual value Accumulated