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    Ias16 Q3

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    ziamz219
    Carly revalued its land and buildings on 31 December 2015. It also sold one machine for $25,000 and purchased a new machine for $17,550. It changed the depreciation method for computers to the reducing balance method. The analysis of property, plant, and equipment in Carly's financial statements for 2015 shows the opening balances, additions, disposals, depreciation and closing carrying amounts for each category.

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    Ias16 Q3

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    ziamz219
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    Carly revalued its land and buildings on 31 December 2015. It also sold one machine for $25,000 and purchased a new machine for $17,550. It changed the depreciation method for computers to the reducing balance method. The analysis of property, plant, and equipment in Carly's financial statements for 2015 shows the opening balances, additions, disposals, depreciation and closing carrying amounts for each category.

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    IAS16-Q3

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    Carly revalued its land and buildings on 31 December 2015. It also sold one machine for $25,000 and purchased a new machine for $17,550. It changed the depreciation method for computers to the reducing balance method. The analysis of property, plant, and equipment in Carly's financial statements for 2015 shows the opening balances, additions, disposals, depreciation and closing carrying amounts for each category.

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    © All Rights Reserved
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    22 views2 pages

    Ias16 Q3

    Uploaded by

    ziamz219
    Carly revalued its land and buildings on 31 December 2015. It also sold one machine for $25,000 and purchased a new machine for $17,550. It changed the depreciation method for computers to the reducing balance method. The analysis of property, plant, and equipment in Carly's financial statements for 2015 shows the opening balances, additions, disposals, depreciation and closing carrying amounts for each category.

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    of 2

    IAS 16 Question 3

    QUESTION 3: IAS 16 PROPERTY, PLANT & EQUIPMENT

    The following is an extract from the financial statements of Carly on 31 December 2014.
    Property, plant and equipment
    Land and Plant and Computers Total
    buildings equipment
    $ $ $ $
    Cost
    On 31 December 2014 1,500,000 340,500 617,800 2,458,300
    Accumulated depreciation
    On 31 December 2014 600,000 125,900 505,800 1,231,700
    Carrying amount
    On 31 December 2014 900,000 214,600 112,000 1,226,600

    Accounting policies
    Depreciation
    Depreciation is provided at the following rates.
    On land and buildings 2% per annum straight line on buildings only
    On plant and equipment 25% reducing balance
    On computers 33.33% per annum straight line

    During 2015 the following transactions took place.


    (1) On 31 December the land and buildings were revalued to $ 1,750,000. Of this amount, $
    650,000 related to the land (which had originally cost $ 500,000). The remaining useful life
    of the buildings was assessed as 40 years.

    (2) A machine which had cost $ 80,000 and had accumulated depreciation of $ 57,000 at the
    start of the year was sold for $ 25,000 in the first week of the year.

    (3) A new machine was purchased on 31 March 2015. The following costs were incurred:
    $
    Purchase price, before discount, inclusive of reclaimable sales tax of $ 3,000 20,000
    Discount 1,000
    Delivery costs 500
    Installation costs 750
    Interest on loan taken out to finance the purchase 300

    (4) On 1 January it was decided to change the method of providing depreciation on computer
    equipment from the existing method to 40% reducing balance.

    Required
    Produce the analysis of property, plant and equipment as it would appear in the financial
    statements of Carly for the year ended 31 December 2015.

    Page 1 of 2 (kashifadeel.com)
    IAS 16 Question 3

    ANSWER – QUESTION 3: IAS 16 PROPERTY, PLANT & EQUIPMENT

    Financial statements for the year ended 31 December 2015 (extract)


    Property, plant and equipment
    Land and Plant & Computer Total
    buildings machinery equipment
    Cost
    At 1 January 2015 1,500,000 340,500 617,800 2,458,300
    Revaluation 250,000 - - 250,000
    Additions W2 - 17,550 - 17,550
    Disposals - (80,000) - (80,000)
    At 31 December 2015 1,750,000 278,050 617,800 2,645,850
    Accumulated depreciation
    At 1 January 2015 600,000 125,900 505,800 1,231,700
    Charge for the year W1 20,000 51,191 44,800 115,991
    Revaluation (620,000) - - (620,000)
    Disposals - (57,000) - (57,000)
    At 31 December 2015 Nil 120,091 550,600 670,691
    Carrying Amount
    At 31 December 2015 900,000 214,600 112,000 1,226,600
    At 31 December 2014 1,750,000 157,959 67,200 1,975,159

    Workings:
    W1 -Depreciation charges
    Buildings = (1,500,000 – 500,000) x 2% 20,000.
    Plant and machinery:
    New machine (17,550 x 25% x 9/12) 3,291
    Existing plant (((340,500 – 80,000) – (125,900 – 57,000)) x 25%) 47,900
    Total 3,291 + 47,900 51,191
    Computer equipment = 112,000 x 40% 44,800

    W2 - Cost of new machine


    Purchase price (20,000 – 3,000 – 1,000) 16,000
    Delivery costs 500
    Installation costs 750
    Interest on loan taken out to finance the purchase 300
    17,550

    Page 2 of 2 (kashifadeel.com)

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