- October 16, 2021 at 2:53 pm #637811khan67Member
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You are appointed as accounts executive in Pak Fans Pvt. Ltd. On the first day of your job; you are told that company bought machinery on 01 July 2017 for PKR 2,400,000 from China. The delivery and freight cost of plant to bring the plant in Pakistan was PKR 500,000. Further PKR 500,000 was spent on freight to bring and assemble plant in industrial area Islamabad. You are also told that the cost of trial production was PKR 100,000. A special kind of license is also required to from environmental departmental annually. The fees of license is PKR 100,000 At that time, the management decided that plant will have a useful life of 5 years and machinery then can be disposed of for PKR 500,000. Pro rata, reducing balance policy is adopted for all kind of capital expenditures.
1. How the capital expenditure will be measurement and recognize for the year ended 31 Dec 2017.
2. Calculate depreciation charge, carrying values for first three years of acquisition also show the Taccounts of accumulated depreciation account, machinery account and depreciation expense account for first three years.(Till year ended Dec 2019) (4Marks)
3. At the start of financial year 2020 (on 01 Jan 2020), the management decided to revalue machinery to 3,000,000 while remaining useful life will be 3 years with 0 residual value. Show how to recognize the revaluation by passing journal entry and relevant T-accounts. (2Marks)
4. Calculate depreciation charge for year ended 31 Dec 2020 and also show the treatment of new
depreciation charge.October 16, 2021 at 2:59 pm #637813John MoffatKeymaster
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This question could not possibly be asked in Paper PM. It has nothing at all to do with performance management, but is basic financial accounting.
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