Delivery charge Installation charge Additional components to increase capacity Service and maintenance Replacement parts Test runs BKAR1013 FINANCIAL ACCOUNTING AND REPORTING I Small spare parts 75,000 50,250 107,250 24,750 17,000 16,500 2,600 REQUIRED: Calculate the cost of land, land improvement, building and equipment based on MFRS 116 Property, Plant and Equipment. Please show your calculations.
Delivery charge Installation charge Additional components to increase capacity Service and maintenance Replacement parts Test runs BKAR1013 FINANCIAL ACCOUNTING AND REPORTING I Small spare parts 75,000 50,250 107,250 24,750 17,000 16,500 2,600 REQUIRED: Calculate the cost of land, land improvement, building and equipment based on MFRS 116 Property, Plant and Equipment. Please show your calculations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![BKARI013 FINANCIAL ACCOUNTING AND REPORTING I
Delivery charge
75,000
Installation charge
50,250
Additional components to increase capacity
107,250
Service and maintenance
24,750
Replacement parts
17,000
Test runs
16,500
Small spare parts
2,600
REQUIRED:
Calculate the cost of land, land improvement, building and equipment based on MFRS 116
Property, Plant and Equipment. Please show your calculations.
QUESTION 2
Ariana Bhd is a pharmaceutical distributor which purchases prescription medicines and other
medical products directly from pharmaceutical manufacturers and distribute across the country.
During year 2020, Ariana Bhd has acquired three types of tangible non-current assets.
The first non-current asset bought is a brand new machine that can facilitate medicines labelling
process using the new technology, thus increase the capacity of distribution per day. The
machine was bought on 15 April 2020 at a quoted price of RM4,000,000 on a term of 2/20,
n/60. Ariana Bhd paid the machine in the discount period. In addition, the following
expenditure incurred3;
i.
Installation cost of RM150,000 and cost of storage for the machine of RM75,000 as it
was delivered before the factory is ready for installation.
Insurance of RM225,000 were incurred as the management seek to reduce the risk of
fire. Out of this amount, 25% was meant to secure the machine while it still in transit.
Expense incurred to test the functionality of the installation amounting to RM300,000.
ii.
iii.
iv.
Maintenance contract for the machine sign-up for the next three years amounting to
RM150.000.
The machine incurred a transportation costs of RM120,000 to bring it to the factory.
Staff training costs to handle the machine amounted to RM180,000.
V.
VI.
The second non-current asset acquired by Ariana Bhd is a two-storey building which to be used
as its warehouse. The value of the building was uncertain because the building was in poor
condition and also unique in its type. This building was bought on 31 May 2020 by issuing
3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F60d8bf0a-d387-42b1-b4ef-ca202423aa68%2F03fdb502-a177-48e7-babe-47522904cf74%2Fmslxmte_processed.jpeg&w=3840&q=75)
Transcribed Image Text:BKARI013 FINANCIAL ACCOUNTING AND REPORTING I
Delivery charge
75,000
Installation charge
50,250
Additional components to increase capacity
107,250
Service and maintenance
24,750
Replacement parts
17,000
Test runs
16,500
Small spare parts
2,600
REQUIRED:
Calculate the cost of land, land improvement, building and equipment based on MFRS 116
Property, Plant and Equipment. Please show your calculations.
QUESTION 2
Ariana Bhd is a pharmaceutical distributor which purchases prescription medicines and other
medical products directly from pharmaceutical manufacturers and distribute across the country.
During year 2020, Ariana Bhd has acquired three types of tangible non-current assets.
The first non-current asset bought is a brand new machine that can facilitate medicines labelling
process using the new technology, thus increase the capacity of distribution per day. The
machine was bought on 15 April 2020 at a quoted price of RM4,000,000 on a term of 2/20,
n/60. Ariana Bhd paid the machine in the discount period. In addition, the following
expenditure incurred3;
i.
Installation cost of RM150,000 and cost of storage for the machine of RM75,000 as it
was delivered before the factory is ready for installation.
Insurance of RM225,000 were incurred as the management seek to reduce the risk of
fire. Out of this amount, 25% was meant to secure the machine while it still in transit.
Expense incurred to test the functionality of the installation amounting to RM300,000.
ii.
iii.
iv.
Maintenance contract for the machine sign-up for the next three years amounting to
RM150.000.
The machine incurred a transportation costs of RM120,000 to bring it to the factory.
Staff training costs to handle the machine amounted to RM180,000.
V.
VI.
The second non-current asset acquired by Ariana Bhd is a two-storey building which to be used
as its warehouse. The value of the building was uncertain because the building was in poor
condition and also unique in its type. This building was bought on 31 May 2020 by issuing
3
![BKARI013 FINANCIAL ACCOUNTING AND REPORTING I
QUESTION 1
During the year 2020, Akasia Maju Bhd (AMB) purchased a piece of land with an existing
building for RM1,125,000. The land was valued at RM1,050,000 and the building at
RM75,000. AMB demolished the building and constructed a new building as headquarters on
the site. The new building and land improvement are expected to last for 80 years with no
residual value and the construction was fully completed by the end of the year 2020.
The following represents the various items related to the project in year 2020:
Items
RM
Lawyer's fee to close the purchase deal
22,500
Cost of land fill and clearing
18,000
Architect's fee
120,000
Fencing around the land
60,000
Cost of demolishing existing building
97,500
Interest on financing of construction paid during construction
282,000
Receipts from sale of demolition scraps
15,000
Construction costs
1,200,000
Landscaping (trees and shrubs)
30,000
Parking lots and concrete walks on the property
180,000
Insurance premium during construction period
18,000
Moving costs from old headquarters to new headquarters
150,000
To accommodate the mission of improving productivity and efficiency, the company also
bought a new special equipment and made the following payments.
Items
RM
Manufacturer's list price
4,303,500
Trade discount
37,500
2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F60d8bf0a-d387-42b1-b4ef-ca202423aa68%2F03fdb502-a177-48e7-babe-47522904cf74%2Fx7dd2gg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:BKARI013 FINANCIAL ACCOUNTING AND REPORTING I
QUESTION 1
During the year 2020, Akasia Maju Bhd (AMB) purchased a piece of land with an existing
building for RM1,125,000. The land was valued at RM1,050,000 and the building at
RM75,000. AMB demolished the building and constructed a new building as headquarters on
the site. The new building and land improvement are expected to last for 80 years with no
residual value and the construction was fully completed by the end of the year 2020.
The following represents the various items related to the project in year 2020:
Items
RM
Lawyer's fee to close the purchase deal
22,500
Cost of land fill and clearing
18,000
Architect's fee
120,000
Fencing around the land
60,000
Cost of demolishing existing building
97,500
Interest on financing of construction paid during construction
282,000
Receipts from sale of demolition scraps
15,000
Construction costs
1,200,000
Landscaping (trees and shrubs)
30,000
Parking lots and concrete walks on the property
180,000
Insurance premium during construction period
18,000
Moving costs from old headquarters to new headquarters
150,000
To accommodate the mission of improving productivity and efficiency, the company also
bought a new special equipment and made the following payments.
Items
RM
Manufacturer's list price
4,303,500
Trade discount
37,500
2
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
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](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education