Homework Help is Here – Start Your Trial Now!
Business
Accounting
g. An entity acquired a property for RM25 million in x2. The asset is depreciated at 2% on cost. The entity had adopted the cost model. In year 5 the entity wants to adopt the revaluation model. h. An entity was depreciating its plant on a straight-line basis. In year x3, it changed its depreciation method to units of production. i. An entity constructed structures in its tin mines to extract tin. It estimated that the cost of dismantling and landscaping in ten years will be RM2 million. After three years, it was estimated that the dismantling and landscaping cost will be RM3 million and not RM2 million. Assume a discount rate of 10%.

g. An entity acquired a property for RM25 million in x2. The asset is depreciated at 2% on cost. The entity had adopted the cost model. In year 5 the entity wants to adopt the revaluation model. h. An entity was depreciating its plant on a straight-line basis. In year x3, it changed its depreciation method to units of production. i. An entity constructed structures in its tin mines to extract tin. It estimated that the cost of dismantling and landscaping in ten years will be RM2 million. After three years, it was estimated that the dismantling and landscaping cost will be RM3 million and not RM2 million. Assume a discount rate of 10%.

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

Note: This is IFRS 108. Financial Accounting & Reporting 3. 

Please answer question 2) g), h), i) 

company has lost the records and is unable to assign the costs to the various components. d. The entity has not depreciated its hotel building as it maintains it very well. The hotel building was constructed at a cost of RM100 million in xl and its scrap value was estimated at RM90 million. e. An entity entered into a contract to hire a plant on 1 January x2. The rental of RM200,000 per annum is payable at the beginning of the year for five years. The fair value of the asset is RM1.2 million. In year 4, when finalising the financial statements for the year ended 31 December x3, it was discovered that it is a finance lease and not an operating lease. The entity had accounted for the rental payment as an expense. f. In year 4, an entity entered into a contract to sell its timber costing RM2 million for RM2.6 million and promised to buy it back in year 6 for RM3 million. In year 4, the sale of timber was recognised as revenue and cost of timber as cost of sales. It is now February x6 and the entity is finalising the financial statements for x5. g. An entity acquired a property for RM25 million in x2. The asset is depreciated at 2% on cost. The entity had adopted the cost model. In year 5 the entity wants to adopt the revaluation model. h. An entity was depreciating its plant on a straight-line basis. In year x3, it changed its depreciation method to units of production. i. An entity constructed structures in its tin mines to extract tin. It estimated that the cost of dismantling and landscaping in ten years will be RM2 million. After three years, it was estimated that the dismantling and landscaping cost will be RM3 million and not RM2 million. Assume a discount rate of 10%.
Transcribed Image Text:company has lost the records and is unable to assign the costs to the various components. d. The entity has not depreciated its hotel building as it maintains it very well. The hotel building was constructed at a cost of RM100 million in xl and its scrap value was estimated at RM90 million. e. An entity entered into a contract to hire a plant on 1 January x2. The rental of RM200,000 per annum is payable at the beginning of the year for five years. The fair value of the asset is RM1.2 million. In year 4, when finalising the financial statements for the year ended 31 December x3, it was discovered that it is a finance lease and not an operating lease. The entity had accounted for the rental payment as an expense. f. In year 4, an entity entered into a contract to sell its timber costing RM2 million for RM2.6 million and promised to buy it back in year 6 for RM3 million. In year 4, the sale of timber was recognised as revenue and cost of timber as cost of sales. It is now February x6 and the entity is finalising the financial statements for x5. g. An entity acquired a property for RM25 million in x2. The asset is depreciated at 2% on cost. The entity had adopted the cost model. In year 5 the entity wants to adopt the revaluation model. h. An entity was depreciating its plant on a straight-line basis. In year x3, it changed its depreciation method to units of production. i. An entity constructed structures in its tin mines to extract tin. It estimated that the cost of dismantling and landscaping in ten years will be RM2 million. After three years, it was estimated that the dismantling and landscaping cost will be RM3 million and not RM2 million. Assume a discount rate of 10%.
2. Discuss the accounting treatment and disclosure for each of the following independent events and transactions. Assume that the tax rate is 25% where applicable. The year-end is 31 December. a. During the course of finalising the accounts for year 4, the accountant discovered that goods sold in year 3 of RM30,000 were included in the closing inventory of year 3. The opening inventory of year 4 included this inventory. b. On 1 January x3, a plant costing RM400,000 was purchased and it was estimated that the economic life was ten years. In year 5, it was determined that the remaining economic life was four years. c. The company acquired a large asset for RM12 million. Effective year x6, the accounting standard requires the cost of the asset to be allocated to its various components and depreciated accordingly. The
Transcribed Image Text:2. Discuss the accounting treatment and disclosure for each of the following independent events and transactions. Assume that the tax rate is 25% where applicable. The year-end is 31 December. a. During the course of finalising the accounts for year 4, the accountant discovered that goods sold in year 3 of RM30,000 were included in the closing inventory of year 3. The opening inventory of year 4 included this inventory. b. On 1 January x3, a plant costing RM400,000 was purchased and it was estimated that the economic life was ten years. In year 5, it was determined that the remaining economic life was four years. c. The company acquired a large asset for RM12 million. Effective year x6, the accounting standard requires the cost of the asset to be allocated to its various components and depreciated accordingly. The
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Basic Accounting Terms
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