Prepare only the Property, plant and equipment reconciliation note of Still Waters Ltd for the financial year ended 31 December 2020 The following list of balances, is an extract from the trial balance of Still Waters Ltd on31 December 2020:Debit /Land at cost (1 January 2020)..Buildings at cost (1 January 2020)Machinery at cost(Credit)1450 0001 920 0001 465 000Motor vehicles at cost650 000Accumulated depreciation.- Motor vehicles(234 000)Additional information1.Land and buildings:1.1 New land was purchased for R900 000 on 2 January 2020, on which a factory building wasconstructed during the current year. The construction costs amounted to R1 980 000.1.2 Machinery with a cost of R560 000 and a residual value of R60 000, was withdrawn fromproduction from 2 January 2020 until 30 September 2020 to be used in the construction ofthe building. The building was ready for use on 1 October 2020.1.3 Existing land and buildings (purchased on 1 September 2017), at the beginning of thecurrent financial year are owner-occupied and used as the company's administration offices,but was rented out from 1 October 2020 to third parties. This was due to only 5% of officeoccupancy needed since the outbreak of the Corona virus. The respective cost of the landand the buildings was R1 450 000 and R1 920 000. The respective net replacement valueof the land and the fair value of the buildings on 1 October 2020 was 10% above theircarrying amount on that date.1.4 On 31 December 2020, the current financial year end of Still Waters Ltd, the fair value of theproperty was as follows:RLand..Buildings1 600 0001 800 000All of the net replacement values and fair values were determined by Mr Honour anindependent swon appraiser.1.5 Machinery and buildings are measured according to the cost model and land measuredaccording to the revaluation model as per IAS 16 - Property, Plant and Equipment. StillWaters Ltd applies the fair value model for investment property as per IAS40 - Investmentproperty.2.Machinery with a cost of R490 000 was disposed of at its carrying value on 1 August 2020. Thecompany purchased all its machinery on 1 December 2017.On 1 July 2020 a motor vehicle with a cost of R220 000 was purchased to replace a motor vehiclethat was disposed of in the previous financial year.3.4.The following rates of depreciation are applicable:BuildingsVehicles5% straight-line method20% reducing balance method20% straight-line methodMachinery

Fixed assetsThe assets available in the company for the use of operating activities and used for a…

Answered: Prepare only the Property, plant and…

Prepare only the Property, plant and equipment reconciliation note of Still Waters Ltd for the financial year ended 31 December 2020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

Prepare only the Property, plant and equipment reconciliation note of Still Waters Ltd for the financial year ended 31 December 2020

The following list of balances, is an extract from the trial balance of Still Waters Ltd on
31 December 2020:
Debit /
Land at cost (1 January 2020)..
Buildings at cost (1 January 2020)
Machinery at cost
(Credit)
1450 000
1 920 000
1 465 000
Motor vehicles at cost
650 000
Accumulated depreciation.
- Motor vehicles
(234 000)
Additional information
1.
Land and buildings:
1.1 New land was purchased for R900 000 on 2 January 2020, on which a factory building was
constructed during the current year. The construction costs amounted to R1 980 000.
1.2 Machinery with a cost of R560 000 and a residual value of R60 000, was withdrawn from
production from 2 January 2020 until 30 September 2020 to be used in the construction of
the building. The building was ready for use on 1 October 2020.
1.3 Existing land and buildings (purchased on 1 September 2017), at the beginning of the
current financial year are owner-occupied and used as the company's administration offices,
but was rented out from 1 October 2020 to third parties. This was due to only 5% of office
occupancy needed since the outbreak of the Corona virus. The respective cost of the land
and the buildings was R1 450 000 and R1 920 000. The respective net replacement value
of the land and the fair value of the buildings on 1 October 2020 was 10% above their
carrying amount on that date.
1.4 On 31 December 2020, the current financial year end of Still Waters Ltd, the fair value of the
property was as follows:
R
Land..
Buildings
1 600 000
1 800 000
All of the net replacement values and fair values were determined by Mr Honour an
independent swon appraiser.
1.5 Machinery and buildings are measured according to the cost model and land measured
according to the revaluation model as per IAS 16 - Property, Plant and Equipment. Still
Waters Ltd applies the fair value model for investment property as per IAS40 - Investment
property.
2.
Machinery with a cost of R490 000 was disposed of at its carrying value on 1 August 2020. The
company purchased all its machinery on 1 December 2017.
On 1 July 2020 a motor vehicle with a cost of R220 000 was purchased to replace a motor vehicle
that was disposed of in the previous financial year.
3.
4.
The following rates of depreciation are applicable:
Buildings
Vehicles
5% straight-line method
20% reducing balance method
20% straight-line method
Machinery

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