- September 24, 2021 at 4:45 am #636397jimeliaMember
- Topics: 2
- Replies: 1
1/ M Co acquired a machine on 1 July 20X3at a cost of $80,000. The company’s policy of depreciating the machine
using the reducing balance method at 20% per annum, pro rata in the year of acquisition and the year of disposal.
What is the depreciation charge for the machine in the end of 30 September 20X4?
My answer is 19,200 TvT I try again and again but still fail to make it right.
2/ A replacement vehicles was purchased by Beta Co for
Imported taxes 3,000
Legal fees 1,000.
The installation and testing costs 2,000.
Employees received training on how to use this machine 2,000.
Five years later, N reassessed and defined the depreciation of $15,000. N decided to exchange this machine for a
new machine costling $90,000 . The agreed trade in value was $65,000.
Which of the following will be in the statement ?
A. Gain $8,000
B. Gain $6,000
C. Loss $6,000
D. Loss $8,000
3/ Bighit Co acquired a machine at the cost of $935,000 on 1 January 20X4. It had useful life of 8 years by straight line
method, the disposal price was estimated $20,000. Three years later, they revised the machine and its useful life up
to 7 more years.
What is the carrying amount of the machine at 31 December 20X8?
4/ P plc acquired a building on 31 March, 20X0 for $1,450,000. The building was being depreciated at the rate of 2%
per annum. On 31 July, 20X9 P plc vacated the building and leased it to a third party tenant. At that date, an
independent value assessed the value of the building to be $1,680,000. As at the end year, 30 November, 20X9, the
building was reassessed at $1,950,000 with no change in the estimated remaining useful life.
P plc has adopted the fair value model for its investment properties. What amount will stand to the credit of P plc’s
revaluation reserve in respect of this building as at 30 November, 20X9?
4/ Suga acquired a dancing machine on 1 March 20X4 for $56,000. The payment for it was correctly entered in cash
book but was entered on the debit side of the dancing machine repairs account.
He charged depreciation on the straight line method, the useful life was 5 years, with pro rata in year of purchase
and disposal, and residual value at the end of asset life was $26,000.
How will Suga’s profit at the end of the year 20X4 be affected by the error?
A. Understated $5,000
B. Overstated $51,000
C. Understated $51,000
D. Overstated $5,000
Kindly help me with those questions. Thanks in advance TvTSeptember 24, 2021 at 8:34 am #636406John MoffatKeymaster
- Topics: 57
- Replies: 51543
Why are you attempting questions for which you do not have answer? You should be using. Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations!
1. They will have owned the machine for 15 months, and therefore the total depreciation will have been 15/12 x 20% x $80,000 = 20,000. (However this is a dreadful question because this is not the way that reducing balance depreciation is applied).
2. The capitalised amount was 80,000 + 3,000 + 1,000 + 2,000 = 86,000.
“defining the depreciation of 15,000′ does not make any sense, but if they are meaning that is the total that has been charged it would mean that the carrying value was then 86,000 – 15,000 = 71,000. The sale proceeds were 65,000 and so that would mean a loss of sale of 71,000 – 65,000 = $6,000.
3. The depreciation initially will have been (935,000 – 20,000) / 8 = 114,375 per year. Therefore after 3 years the carrying value was 935,000 – (3 x 114,375) = 591,875. From then on the depreciation is (591,875 – 20,000) / 12 = 47,656 per year, and so the carrying value at 31 December 20X8 is 591,875 – 47,656 = 544,219.
Check my arithmetic, but it seems that neither of the answers provided are correct.
4. Investment properties are not examinable until Paper FR.
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