FINANCIAL ACCOUNTING 201

DEPARTMENT OF
Class Test ** Date: 02 May 2019
ACCOUNTING
Time: 40 minutes
UP
S Coetzee/C Janse van Rensburg/A Schmulian

SOLUTION

QUESTION 1

Recognise Cost acquisition 1 000 000 Depreciable

provision: amount
PV of provision:
n = 10 Cost 1 039 500
i=8 Residual value
(100 000)
FV = 85 278
PV = ? = 39 500 39 500
Total cost 1 039 500 939 500

Do not Cost acquisition 1 000 000 Depreciable

recognise amount
provision:
Cost 1 000 000
Residual value
less PV of costs ([100 000 – 39
of dismantling 500])
and restoration
939 500

QUESTION 2

1 January 20X3 245 000

Depreciation 20X3 [245 000 – 29 000]
/6 (36 000)
Depreciation 20X4 (36 000)
Carrying amount 1 January 20X5 173 000

1
Depreciation 20X5 [173 000 – 14 000]
/ [5 – 2]
= 159 000 / 3 (53 000)
Carrying amount 31 December 20X5 120 000
Depreciable amount 31 December 20X5 [120 000 – 14 000] 106 000

OLD NEW
Difference in current year depreciation
= increase 17 000 36 000 53 000

Difference in future cumulative depreciation

(depreciable amount at end of year)
106 000
Carrying amount 1 January 20X5 173 000
Depreciation 20X5 OLD (36 000)
Carrying amount 31 December 20X5 OLD
137 000
Depreciable amount 31 December 20X5 OLD
[137 000 – 29 000]
=108 000
= decrease 2 000

QUESTION 3

QUESTION 4

Calculation question 3 & 4

Land Revaluation Buildings Revaluation

surplus land surplus
buildings
1 Jan 20X1 5 000 000
Revaluation 50 000 50 000
1 Jan 20X2 5 050 000
Revaluation 15 000 15 000
1 Jan 20X3 5 065 000 20 475 000
Depr 20X3
[20 475 000 / 20] (1 023 750)
Carrying amount 19 451 250
31 Dec 20X3
Revaluation (35 000) (35 000) 348 745 348 745
2
1 Jan 20X4 5 030 000 19 799 995
Depr 20X4
[19 799 995 / 19] (1 042 105)
Realisation
[1 042 105 – (18 355)
1 023 750]
Carrying amount 18 757 890 330 390
31 Dec 20X4
Revaluation (10 000) (10 000) (350 190) (330 390)
1 Jan 20X5 5 020 000 18 407 700 0
[19 800 P/L]
Depr 20X5
[18 407 700 / 18] (1 022 650)
Carrying amount 17 385 050
31 Dec 20X5
Revaluation 27 000 27 000 279 990 [19 800 P/L]
260 190
1 Jan 20X6 5 047 000 17 665 040
Depr 20X6
[17 665 040 / 17] (1 039 120)
Realisation
[1 039 120 – (15 370)
1 023 750]
Carrying amount 47 000 16 625 920 244 820
31 Dec 20X6
Revaluation 32 000 32 000 260 000 260 000
1 Jan 20X7 5 079 000 16 885 920
Depr 20X7
[16 885 920 / 16] (1 055 370)
Realisation
[1 055 370 – (31 620)
1 023 750]
Carrying amount 15 830 550 473 200
31 Dec 20X7
[5 079 000 – 79 000
5 000 000]
Revaluation 6 000 6 000 120 000 120 000
1 Jan 20X8 5 085 000 15 950 550