Homework Help is Here – Start Your Trial Now!
Business
Accounting
Calculate the cost of the plant in accordance with IAS 16 - Property, Plant and Equipment.

Calculate the cost of the plant in accordance with IAS 16 - Property, Plant and Equipment.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Hh1.

Account 

Namibia Plastics and Packaging is a manufacturing company specializing in the manufacture of packaging material. On 1 March 2022 the company bought a new plant to increase its production capacity. The cost breakdown incurred in the acquisition and commissioning of the plant are shown below. Plant invoice price Cost of initial testing the plant Sale of proceeds from testing Proceeds selling costs Function for commissioning the new plant 1 000 $ 60 000 2 000 600 100 On 1 April 2022, production started on the new plant. During the month of April, the company suffered an operating loss of $5 000 mainly because orders received during the month were very few. However, the company managed to reach the breakeven point in May and thereafter the company was making a profit. The estimated life of the plant is 10 years. The Namibia environment Agency directed that after the life of the plant the company is required to rehabilitate the area the plant was operating from. The rehabilitation cost is estimated at $10 000. Required Calculate the cost of the plant in accordance with IAS 16 - Property, Plant and Equipment. Kindly answer all questions
Transcribed Image Text:Namibia Plastics and Packaging is a manufacturing company specializing in the manufacture of packaging material. On 1 March 2022 the company bought a new plant to increase its production capacity. The cost breakdown incurred in the acquisition and commissioning of the plant are shown below. Plant invoice price Cost of initial testing the plant Sale of proceeds from testing Proceeds selling costs Function for commissioning the new plant 1 000 $ 60 000 2 000 600 100 On 1 April 2022, production started on the new plant. During the month of April, the company suffered an operating loss of $5 000 mainly because orders received during the month were very few. However, the company managed to reach the breakeven point in May and thereafter the company was making a profit. The estimated life of the plant is 10 years. The Namibia environment Agency directed that after the life of the plant the company is required to rehabilitate the area the plant was operating from. The rehabilitation cost is estimated at $10 000. Required Calculate the cost of the plant in accordance with IAS 16 - Property, Plant and Equipment. Kindly answer all questions
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Property, Plant and Equipment
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS