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N.B:SHOW ALL STEPS USED WITH CLEAR DETAILS AND EXPLANATIONS .

N.B:SHOW ALL STEPS USED WITH CLEAR DETAILS AND EXPLANATIONS .

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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N.B:SHOW ALL STEPS USED WITH CLEAR DETAILS AND EXPLANATIONS .

TR Limited has recently acquired an item of plant. The details of this acquisition are: List price of plant Ancillary costs: Shipping and handling costs Pre-production testing Maintenance contract for three years Site preparation costs Electrical cable installation Concrete reinforcement Own labour costs Frw 240,000 2,750 12,500 24,000 14,000 4,500 7,500 Trade discount applicable to TTR is 12.5%. TTR paid for the plant (excluding the ancillary costs) within four weeks and thus received a 3% early settlement discount. An error was made in installing the electrical cable. This error cost FRW8,000 and isincluded in the FRW14,000 figure. The plant is expected to last for 10 years. At the end of this period, there will be compulsory costs of FRW18,000 to dismantle the plant and restore the site. The cost of capital is 10%. Required: 1. Calculate (detail your calculations) the initial cost of the plant that should be recognized in the Statement of FinancialPosition 2. Carry out proper journal entries
Transcribed Image Text:TR Limited has recently acquired an item of plant. The details of this acquisition are: List price of plant Ancillary costs: Shipping and handling costs Pre-production testing Maintenance contract for three years Site preparation costs Electrical cable installation Concrete reinforcement Own labour costs Frw 240,000 2,750 12,500 24,000 14,000 4,500 7,500 Trade discount applicable to TTR is 12.5%. TTR paid for the plant (excluding the ancillary costs) within four weeks and thus received a 3% early settlement discount. An error was made in installing the electrical cable. This error cost FRW8,000 and isincluded in the FRW14,000 figure. The plant is expected to last for 10 years. At the end of this period, there will be compulsory costs of FRW18,000 to dismantle the plant and restore the site. The cost of capital is 10%. Required: 1. Calculate (detail your calculations) the initial cost of the plant that should be recognized in the Statement of FinancialPosition 2. Carry out proper journal entries
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