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Land & Building Additions

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Land & Building Additions

  • This topic has 2 replies, 3 voices, and was last updated 15 years ago by nguyen kim thanh.
Viewing 3 posts - 1 through 3 (of 3 total)
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    Posts
  • May 15, 2010 at 7:25 am #43844
    Anonymous
    Inactive
    • Topics: 9
    • Replies: 16
    • ☆

    I have got some problem in calculating the Land & building additions in the cash flow question. The link is attached and the question (Q 4) can be viewed there clearly.
    June 2005 Q 4

    The following supporting information is available:
    (i) Details relating to the non-current assets are:
    Property, plant and equipment at:
    At 31 march 2004 Land and Buildings
    Cost/Valuation = 500; Depreciation = 80 ; Carrying Value = 420
    At 31 march 2004 Plant
    Cost/Valuation = 445 ; Dep = 105 ; Carrying Value = 340

    At 31 march 2005 Land and Buildings
    Cost/Valuation = 600 ; Depreciation = 12 ; Carrying Value = 588
    At 31 march 2005 Plant
    Cost/Valuation = 440 ; Dep = 148 ; Carrying Value = 292

    Casino revalued the carrying value of its land and buildings by an increase of $70 million on 1 April 2004. On
    31 March 2005 Casino transferred $3 million from the revaluation reserve to retained earnings representing the realisation of the revaluation reserve due to the depreciation of buildings.
    During the year Casino acquired new plant at a cost of $60 million and sold some old plant for $15 million at
    a loss of $12 million.

    This is how i go on to calculate the Additions
    First calculating dep.
    80-70-12= 2 Depreciation charge for the year
    Now if i make land and building account based on {cost} not {carrying value} to calculate additions to the land and buildings during the current year then it should just be 600 -500 = 100.
    Likewise calculating it through NBV method additions will be
    420 + 70 – 12 – 588 = 110 Additions
    Now see the difference of 10? between the two methods. i can’t figure out why this occurs. Actual additions are 110 whereas if i were to calculate it through Land and Building cost account in the exam i would have been wrong. My mind has stopped working for now. maybe m doing some silly mistake. Please Let me know

    May 17, 2010 at 5:49 am #60260
    trance00
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    1 April 2004 Cost = 420 + 70(revaluation) = 490
    Any increase would be due to addtions.
    So additions = 600 – 490 = 110
    Not sure how you got 500.

    May 17, 2010 at 4:36 pm #60261
    nguyen kim thanh
    Member
    • Topics: 1
    • Replies: 6
    • ☆

    Please remember that now you can not take the cost of 500 at the 31 Mar. 20040
    to caculate the addition of land and building. If no revaluation you calculate like this it is o.k

    But when there is revaluation at 31 Mar. 2004 you have to take the new cost of land and building

    That is 420+70=490 (You compare with 500 is completely wrong)

    Therefore the difference 500-490=10

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