loyce Limited purchased land and building on 1st January, 2012 for GH¢200,000 (land GH¢60,000 and buildings GH¢140,000). While there is no depreciation on land, however the company uses 5% reducing balance method on building. On Ist January 2016 the land was revalued to GH¢75,000 and the buildings to GH¢135,000. Depreciation on buildings is computed at 5% reducing balance. The financial statements are prepared on a yearly basis. Required: Calculate the revaluation reserve for the year ended 31st December, 2016.
loyce Limited purchased land and building on 1st January, 2012 for GH¢200,000 (land GH¢60,000 and buildings GH¢140,000). While there is no depreciation on land, however the company uses 5% reducing balance method on building. On Ist January 2016 the land was revalued to GH¢75,000 and the buildings to GH¢135,000. Depreciation on buildings is computed at 5% reducing balance. The financial statements are prepared on a yearly basis. Required: Calculate the revaluation reserve for the year ended 31st December, 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 1
Joyce Limited purchased land and building on 1st January, 2012 for GH¢200,000 (land
GH¢60,000 and buildings GH¢140,000). While there is no depreciation on land, however the
company uses 5% reducing balance method on building. On 1st January 2016 the land was
revalued to GH¢75,000 and the buildings to GH¢135,000. Depreciation on buildings is computed
at 5% reducing balance. The financial statements are prepared on a yearly basis.
Required:
Calculate the revaluation reserve for the year ended 31st December, 2016.
Transcribed Image Text:LBC manufactures mechanical talkative recorder, which trade under the name Talkative'. In the
year ended 31* December 2017, 10,000 Talkatives were manufactured and the related costs were:
GHC
Materials
3,000
Labour
4,000
Depreciation of Machinery
2,000
Factory rates
Selling expenses
1,000
3,000
Expenses at head office
2,000
Abnormal loss
3,000
In addition to the information above, at 31* December 2017, there were 2,000 Talkatives in
inventory.
Required:
Assuming that these have a resale value of GH¢5 and a Net Realisable Value of GH¢1.15 each,
what value should be placed on the closing inventory?
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