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%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Note: This is IFRS 108. Financial Accounting & Reporting 3.
Please answer question 2) g), h), i)
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%.
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
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