Obra Ltd is your client. It has adopted IFRS as the financial reporting framework and has asked you to assist in dealing with the following issues. On I January 2014 Obra Ltd acquired a machine under the following terms. Manufacturer's base price GHS1,050,000 Trade discount (applying to base price only) 20% Early settlement discount taken (on the payable amount of the base cost only) 5% Freight charges GHS 30,000 Electrical installation cost GHS 28,000 Staff training in use of machine GHS 40,000 Pre-production testing GHS 22,000 Purchase of a three-year maintenance contract GHS60,000 Estimated residual value GHS 20,000 Estimated life in machine hours 6,000 hours Hours used -year ended 31 December 2014 - 1,200 hours - year ended 31 December 2015 1,800 hours - year ended 31 December 2016 (see below) 850 hours On I January 2016 Obra Ltd decided to upgrade the machine by adding new components at a cost of GHS200,000. This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine. The upgrade also increased the estimated remaining life of the machine at I January 2016 to 4,500 machine hours and its estimated residual value was revised to GHS40,000. Required Prepare extracts from the statement of profit or loss and statement of financial position for the above machine for 31 December 2014,
Obra Ltd is your client. It has adopted IFRS as the financial reporting framework and has asked you to assist in dealing with the following issues.
On I January 2014 Obra Ltd acquired a machine under the following terms.
Manufacturer's base price GHS1,050,000
Trade discount (applying to base price only) 20%
Early settlement discount taken (on the payable amount of the base cost only) 5%
Freight charges GHS 30,000
Electrical installation cost GHS 28,000
Staff training in use of machine GHS 40,000
Pre-production testing GHS 22,000
Purchase of a three-year maintenance contract GHS60,000
Estimated residual value GHS 20,000
Estimated life in machine hours 6,000 hours
Hours used -year ended 31 December 2014 - 1,200 hours
- year ended 31 December 2015 1,800 hours
- year ended 31 December 2016 (see below) 850 hours
On I January 2016 Obra Ltd decided to upgrade the machine by adding new components at a cost of GHS200,000. This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine. The upgrade also increased the estimated remaining life of the machine at I January 2016 to 4,500 machine hours and its estimated residual value was revised to GHS40,000.
Required
Prepare extracts from the statement of profit or loss and
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