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    FR 1 Assignment 1 IAS 16 08112022 071429am 15102023 114037am

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    Anas
    PQR Enterprises revalues its property, plant, and equipment every two years. In June 2014, an appraisal increased the value of the company's office building to Rs. 5,750 million and its warehouse to Rs. 3,350 million. For the year ended June 30, 2014, PQR should transfer the maximum possible revaluation surplus to retained earnings. For the year ended June 30, 2015, PQR should prepare journal entries to record depreciation on the assets. Pilot Limited acquires and disposes of equipment for its bakery operations over several years between 2010 and 2014. It depreciates equipment using the reducing balance method at 10% annually. Ledger accounts should be prepared for equipment,

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    FR 1 Assignment 1 IAS 16 08112022 071429am 15102023 114037am

    Uploaded by

    Anas
    25 views2 pages
    PQR Enterprises revalues its property, plant, and equipment every two years. In June 2014, an appraisal increased the value of the company's office building to Rs. 5,750 million and its warehouse to Rs. 3,350 million. For the year ended June 30, 2014, PQR should transfer the maximum possible revaluation surplus to retained earnings. For the year ended June 30, 2015, PQR should prepare journal entries to record depreciation on the assets. Pilot Limited acquires and disposes of equipment for its bakery operations over several years between 2010 and 2014. It depreciates equipment using the reducing balance method at 10% annually. Ledger accounts should be prepared for equipment,

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    Property plant and equipment. IAS 16 study material with practise questions

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    FR-1-Assignment-1-IAS-16-08112022-071429am-15102023-114037am

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    PQR Enterprises revalues its property, plant, and equipment every two years. In June 2014, an appraisal increased the value of the company's office building to Rs. 5,750 million and its warehouse to Rs. 3,350 million. For the year ended June 30, 2014, PQR should transfer the maximum possible revaluation surplus to retained earnings. For the year ended June 30, 2015, PQR should prepare journal entries to record depreciation on the assets. Pilot Limited acquires and disposes of equipment for its bakery operations over several years between 2010 and 2014. It depreciates equipment using the reducing balance method at 10% annually. Ledger accounts should be prepared for equipment,

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views2 pages

    FR 1 Assignment 1 IAS 16 08112022 071429am 15102023 114037am

    Uploaded by

    Anas
    PQR Enterprises revalues its property, plant, and equipment every two years. In June 2014, an appraisal increased the value of the company's office building to Rs. 5,750 million and its warehouse to Rs. 3,350 million. For the year ended June 30, 2014, PQR should transfer the maximum possible revaluation surplus to retained earnings. For the year ended June 30, 2015, PQR should prepare journal entries to record depreciation on the assets. Pilot Limited acquires and disposes of equipment for its bakery operations over several years between 2010 and 2014. It depreciates equipment using the reducing balance method at 10% annually. Ledger accounts should be prepared for equipment,

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    © All Rights Reserved
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    of 2

    Question 1:

    PQR Enterprises was incorporated on 1 July 2012. The company depreciates its property, plant and
    equipment on straight line basis over their useful life. It uses revaluation model for subsequent
    measurement of the property, plant and equipment and has a policy of revaluing these after every two
    years.

    Following information pertains to its property, plant and equipment:


    Assets Cost as on WDV as on Value as Useful life in years
    01-07-2013 01-07-2013 determined
    by
    professional
    valuer
    on 30-06-2014
    ---------------- Rs. in million ---------------- Original at Remaining as
    acquisition determined by
    valuer
    Office building 6,000 5,500 5,750 12 8
    Warehouse 4,500 4,050 3,350 10 8

    During the year there was no addition or deletion in the above assets

    As per policy, PQR transfers the maximum possible amount from the revaluation surplus to retained
    earnings on an annual basis.

    Required:
    Prepare necessary journal entries for the year ended 30 June 2014 and 2015.

    Question 2:

    Pilot Limited (PL) was engaged in manufacturing various bakery products. It needed certain
    equipment which PL kept changing with the circumstances.
    1. PL’s business commenced on 1 January 2010, and decided to fix its annual reporting
    date as 31 December.
    2. PL acquired a number of equipment on commencement for Rs. 5,000,000.
    3. On 31 December 2010, it disposed off one of the equipment costing Rs. 1,000,000 for
    Rs. 845,000.
    4. PL purchased equipment on 1 July 2012 for Rs. 1,500,000.
    5. On 1 January 2013 it got one of its equipment costing Rs. 2,000,000 exchanged against a
    trade in allowance of Rs. 700,000. It paid Rs. 1,500,000 by cheque.
    6. PL’s policy for depreciating its assets is 10% on reducing balance basis.

    Required:
    Ledger accounts for the year 2010 to 2014
    - Equipment
    - Accumulated depreciation
    - Disposal account
    Question 3:

    Ammar is a manufacturer of personal products and has factories in two different cities. On 1
    November 2011, he bought a new state-of-the-art plant from KronesInc. USA. The invoice value of
    the plant was Rs. 250 million. Other relevant details are as follows:

    i) Costs of import:

    Rs. in ‘000
    LC opening charges 1.00
    Import duty 25.00
    Sales tax paid, recoverable against production output 40.00
    Clearing & transportation 5.00

    ii) Costs incurred on SITE preparation:

    Amount paid to consultants 2.00


    Civil and electrical works 3.00
    The above includes cost of equipment damaged due to mishandling 0.80

    iii) The plant was received at the SITE on 1 February 2012. The installation and test run were
    successfully completed in three months time at a cost of Rs. 6 million. The net sale proceeds of
    test production were Rs. 1.2 million.

    iv) Commercial production commenced on 1 May 2012. During the period in which the plant
    was installed, administration and general overheads increased by Rs. 1 million as compared
    to the previous period.

    v) Salary of factory manager is Rs. 250,000 per month. He contributed 30% of his time in
    supervising the installation.

    vi) Staff training cost amounted to Rs. 0.25 million.

    vii) The plant is expected to last fifteen years with no residual value.

    Required:

    In accordance with IAS-16 calculate:

     cost at which the plant would be capitalized.


     depreciation for the year ended 31 December 2012 under the straight line method.
    -

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