The accountant has started the PPE and Depreciation Schedule for the year ended September 30, 2004. At Island Solutions, the depreciation policy is to apply one month’s ownership, one month’s depreciation. Your team was provided with the following information. • Land and Building were acquired for $800 000 in a lump sum purchase. At the time of acquisition, the appraised values of the land and building were $90 000 and $810 000 respectively . • Equipment with an appraised value and residual value of $40 000 and $3 000 respectively was received by the company as a donation. • Machinery costing $182 900 inclusive of $600 installation expense and $14 900 normal repair and maintenance cost, and with a $6 000 estimated salvage value was sold on February 1, 2004. 1. Explain three (3) similarities and two (2) differences between IFRS and US GAAP with respect to accounting for property, plant and equipment. 2. Complete the PPE and Depreciation Schedule below by providing the values for [a] – [j]. Please show workings Assets Date of Acquisition Cost Residual Value Depreciation Method Estimated Useful Life (Years) Annual Depreciation Expense at September 30 2003 2004 Land Oct 1, 2002 a - - - - - Building Oct 1, 2002 b $40,000 SLM c $13,600 d Equipment Oct 1, 2002 e 3000 150% declining balance 10 f g Machinery Oct 1, 2002 h 6000 SYD 8 i j
The accountant has started the PPE and
• Land and Building were acquired for $800 000 in a lump sum purchase. At the time of acquisition, the appraised values of the land and building were $90 000 and $810 000 respectively
. • Equipment with an appraised value and residual value of $40 000 and $3 000 respectively was received by the company as a donation.
• Machinery costing $182 900 inclusive of $600 installation expense and $14 900 normal repair and maintenance cost, and with a $6 000 estimated salvage value was sold on February 1, 2004.
1. Explain three (3) similarities and two (2) differences between IFRS and US GAAP with respect to accounting for property, plant and equipment.
2. Complete the PPE and Depreciation Schedule below by providing the values for [a] – [j].
Please show workings
| Assets | Date of Acquisition | Cost | Residual Value | Depreciation Method |
Estimated Useful Life (Years) |
Annual Depreciation Expense at September 30 | |
| 2003 | 2004 | ||||||
| Land | Oct 1, 2002 | a | - | - | - | - | - |
| Building | Oct 1, 2002 | b | $40,000 | SLM | c | $13,600 | d |
| Equipment | Oct 1, 2002 | e | 3000 | 150% declining balance | 10 | f | g |
| Machinery | Oct 1, 2002 | h | 6000 | SYD | 8 | i | j |
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