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September 29, 2016 at 3:12 am #341349apoapala
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1.Atlantic ocean co has the following balances in its financial statements:
other net assets 215
following a period of losses, the recoverable amount of the division is deemed to be $2million.
A recent valuation of the building showed that the building has a market value of $1.25 million. the other net assets are at their recoverable amount. the company uses the cost model for valuing property,plant and equipment.
what is the balance on property and plant following the review?
2. getting well is a public limited company with a reporting date of 31december 2010 and functional currency of dollars($). it has the following transactions in dinars:
a) on 1 January 2010 a loan of 12million dinars was contracted from bank. it repaid 3million dinars to the bank on 30th June 2010
b) on 31st june 2010,it purchased land at a cost of 30million dinars. the land is measured using the cost model.
exchange rates are as follows:
dinars : $1
average rate for the ended 31/12.2010
what is the total profit/loss arising on the loan transaction in the year ended 31st dec 2010 and the carrying amount of the land as at 31st december 2010?
3. D is a large paper manufacturing company. the companys finance director is working on the published accounts for the year ended 31st march 20X3. the chief accountant has prepared the following list of problems which have to be resolved before the statements can be finalised.
i. possible investment property(IAS40)
The company decided to take advantage of depressed property prices and purchased a new office building in the centrer of Westville. this was purchased with the intention of the building being resold at a profit within 5years. in the meantime ,the company is using the property to house the administrative staff from the westown factory ubtill such time as their own offices can be repaired. it is anticipated that this will take at least 9months. the managing director has suggested that the building should not be depreciated
ii. The company paid the engineering department at Northtown university a large sum of money to design a new pulping process which will enable the use of cheaper raw materials.
this process has been successfully tested in the universitys laboratories and is almost certain to be introduced at D’s pulping plant within the nest few months.
The company paid a substantial amount to the universitys biology department to develop a new species of tree which could grow more quickly and therefore enable the companys forest to generate more wood for paper manufacturing. The project met with some success in that the new tree was developed. unfortunately it was prone to diseases and the cost of the chemical sprays needed to keep the wood healthy rendered the tree uneconomic.
Explain how each of these matters should be dealt with in published accounts for the year ended 31st march 20X3 in light of the accounting standards referred to above?
assume that the amounts are material in every case.
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