(ii) Tonson Plc had acquired a machine on 1 January 2020 at a cost of £100,000  with an estimated useful economic life of ten years. The fair value of the machine  is £52,000 and the selling costs are £4,000. The expected future cash flows are  £10,000 per annum for the next five years. The current cost of capital is 10%.  An annuity factor for this rate over this period is 3.791. Required: Prepare extracts from the financial statement for the year-ended 31 December  2020. Show all your workings.

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

(ii) Tonson Plc had acquired a machine on 1 January 2020 at a cost of £100,000 
with an estimated useful economic life of ten years. The fair value of the machine 
is £52,000 and the selling costs are £4,000. The expected future cash flows are 
£10,000 per annum for the next five years. The current cost of capital is 10%. 
An annuity factor for this rate over this period is 3.791.
Required:
Prepare extracts from the financial statement for the year-ended 31 December 
2020. Show all your workings. 

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Accounting for Borrowing costs
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.
Similar questions
  • SEE MORE QUESTIONS
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