Invaders Ltd recently purchased a cutting machine from one of its suppliers. The machine waspurchased on 01 March 2019 and brought into use on 01 May 2019. The financial year end of thecompany is 28 February.The following costs were incurred relating to the purchase of the machine:Purchase PriceDelivery costsAdministration costsImport duties (non-refundable)Staff party to celebrate the acquisition of the new machineTesting to ensure that machine is fully operationalInstallation costsThe following table indicates the number of units produced over a 3-month period:March-May 2019150 000 unitsJune-August 2019220 000 units180 000 units230 000 units195 000 units232 000 units180 000 units255 000 unitsSeptember-November 2019December-February 2020March-May 2020June-August 2020September-November 2020December-February 2021RandThe machine has a residual value of R80 000 and will be depreciated using the units of productionmethod. The machine is expected to produce a total of 9 000 000 units over its useful life of 10years.You are required to:a) Calculate the cost to be capitalised to the machinery account.b)Provide the journal entries for the depreciation for the years endedFebruary 2020 and 2021.980 00015 50022 00012 00018 8005 50032 000c) Prepare an extract of the Statement of Financial Position to reflect the machinery as atFebruary 2021.Page 6 of 7

Answered: Image /qna-images/answer/0a89e53c-e814-40a8-8420-a54f2d4452c7.jpg

ased a cutting machine from one of its suppliers. The machine was 9 and brought into use on 01 May 2019. The financial year end of the curred relating to the purchase of the machine: lable) acquisition of the new machine hine is fully operational s the number of units produced over a 3-month period: 150 000 units 220 000 units 9 180 000 units 230 000 units 195 000 units 232 000 units O 180 000 units 255 000 units be capitalised to the machinery account. value of R80 000 and will be depreciated using the units of production Dected to produce a total of 9 000 000 units over its useful life of 10 Intrian Rand donaciation for the 980 000 15 500 22 000 12 000 18 800 5 500 32 000

ased a cutting machine from one of its suppliers. The machine was 9 and brought into use on 01 May 2019. The financial year end of the curred relating to the purchase of the machine: lable) acquisition of the new machine hine is fully operational s the number of units produced over a 3-month period: 150 000 units 220 000 units 9 180 000 units 230 000 units 195 000 units 232 000 units O 180 000 units 255 000 units be capitalised to the machinery account. value of R80 000 and will be depreciated using the units of production Dected to produce a total of 9 000 000 units over its useful life of 10 Intrian Rand donaciation for the 980 000 15 500 22 000 12 000 18 800 5 500 32 000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Recording Asset Acquisition, Depreciation, and Disposal On January 2, 2016, Verdi Company acquired a machine for $75,000. In addition to the purchase price, Verdi spent $2,100 for shipping and installation, and $2,600 to calibrate the machine prior to use. The company estimates that the machine has a useful life of 5 years and a residual value of $11,000. Required a. Prepare journal entries to record the acquisition costs. Description Debit + → b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016. Description Credit Cash ◆ ◆ Accumulated depreciation c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale. Credit Description Debit Credit Debit ◆ ♦
Do not give answer in image
On January 31, 2020, Manning Company acquired a new machine by paying $40,000 cash and agreeing to pay $20,000 annually for four years, beginning on January 31, 2021. Assuming an interest rate of 10%, Manning should record the acquisition cost of the machine on January 31, 2020, at a.$120,000. b.$109,737. c.$103,397. d.$102,092
Current Attempt in Progress On January 1, 2023 (the first day of its fiscal year) Swifty Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2023 through 2027: 2023: 2024: on January 1, acquired the patent for the production process for a cash payment of $18,600,000, and determined that the process had an indefinite useful life. on December 31, tested the patent for impairment and determined that its fair value was $19,800,000. 2026: on December 31, tested the patent for impairment and determined that its fair value was $17,500,000. 2025: on December 31, tested the patent for impairment and determined that its fair value was $18,000,000. on January 1, determined that the useful life of the patent was no longer indefinite, its carrying amount was recoverable, its estimated remaining useful…
9
please answer question 3
an entity acquired furniture and fittings on 1 July 2021 for $42 000. The estimated useful life of the furniture and fittings at acquisition date was 8 years and the residual value was $2000. The company sold all the furniture and fittings on 1 January 2027 for $18 000. The journal entry to reflect the sale is:
Do not give answer in image
Dont uplode image in answer At 1 July 2019 David Ltd acquired the following non-current assets: Machine A Machine B Machine C Cost 48,000 Cost 70,000 Cost 85,000 Useful Life 8 years Useful Life 8 years Useful Life 10 years The firm uses the valuation model for all three assets At 30 June 2020, the fair values of all assets were assessed. Machine A had a fair value of $45,000, and Machine B a fair value of $58,000. The remaining useful lives were assessed to be 5 years for Machine A and 4 years for Machine B. At this time the value of Machine C was unchanged. At 30 June 2021, Machine C was sold for a consideration of $75,000. On the same date the fair values of Machine A and Machine B were reassessed. Machine A had a fair value of $32,000 and Machine B a fair value of $54,000. Required: Prepare the journal entries for David Ltd for the years ending 30 June 2020 and 2021. Assume a tax rate of 30%.
Pharoah Limited organized late in 2019 and set up a single account for all intangible assets. The following summary shows the entries in 2020 (all debits) that have been recorded in Intangible Assets since then: Jan. 2 Purchased patent (8-year life) $338,000 Mar. 31 Costs to search for new ways to apply patent that was purchased on Jan. 2 21,000 Apr. 1 Purchased goodwill (indefinite life) 307,000 July 1 Purchased franchise with 10-year life; expiration date July 1, 2030 259,000 1 Promotional costs to increase the future economic benefit of the goodwill that was purchased on Apr. 1 33,000 Aug. 1 Payment for copyright (5-year life) 142,800 1 Purchased trademark (3-year life) 14,400 1 Purchased customer list (2-year life) 9,600 Sept. 1 Research costs 236,000 $1,360,800 Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles.