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Property-Plant-and-Equipment-PPE-pptx (Complete Notes)
Property-Plant-and-Equipment-PPE-pptx (Complete Notes)
Initial cost of
assets
purchased
Purchase price
• including import duties and non-
refundable purchase taxes, after
deducting trade discounts and rebates.
Required:
a) Calculate the initial cost of the machinery.
b) Prepare journal entries in respect of provision for
the dismantling, removal and restoration costs for
the year ended 31 December 20x8 and 20x9.
(a) RM
Invoice price of machinery 600,000
Trade discount (60,000)
540,000
Insurance on shipment 8,000
Import duties and taxes 500,000
Delivery costs 100,000
Installation charges 12,000
Dismantling costs 17,000
Initial cost of the machinery 1,177,000
(b)
RM RM
1.1.20x8
Dr Machinery (SOFP) 1,177,000
Cr Bank (SOFP) 1,177,000
(To record the purchase and installation of the machinery)
Required:
Calculate cost of the land and building separately.
Building
Direct material and labours 800,000
Wasted material (100,000)
700,000
Constractors' costs 1,000,000
Directly attributable overhead 200,000
Architect's (75% x 400,000) 300,000
2,200,000
Module Code and Module Title Title of Slides
Depreciation
220,000 −20,000
Annual Depreciation= = 20,000
10
Required:
Calculate the depreciation charge by using
straight line method for the year ended
31/3/20x7
RM
Cost at 1.4.x2 85,000
Depreciation (1.4.x2-31.3.x6) (32,000)
(RM85,000-5,000)/10 x 4
CA at 1.4.x6 53,000
Depreciation (1.4.x6-31.3.x7) (12,000)
(RM53,000-5,000)/4
CA at 31.3.x7 41,000
Subsequent costs
Capitalisation Expensed
Replacement off
Major
of major parts Inspection
or
Overhauls
Required:
Calculate the carrying value as at 1 Jan
20x8 and depreciation charge for the year
20x8.
207,000
= ----------------------
6 years
= RM34,500
Required:
Prepare the journal entries for the year x4
and the extract of statement of profit or loss
and other comprehensive income for the
year ended 31.12.x3 and 31.12.x4 and
SOFP on those dates.
Working: RM
Carrying amount at 31.12.x2 15,000
Revaluation decrease (2,000) - expense
Fair value at 31.12.x3 13,000
Revaluation increase 7,000 2,000 to reverse
-income
5,000 OCI/RS
Fair value at 31.12.x4 20,000
Other income
Gain on property revaluation 2,000
(Reversal of revaluation decrease on property)
Expense
Loss on property revaluation (2,000)
SOFP (Extract) at
NCA
PPE 20,000
Equity
Revaluation surplus/reserve 5,000
Required:
Prepare the journal entries for the year x4
and the extract of statement of profit or loss
and other comprehensive income for the
year ended 31.12.x4 and SOFP as at
31.12.x4.
Working: RM
CA as at 31.12.x2 15,000
Revaluation increase/surplus 5,000 – OCI&RS
FV at 31.12.x3 20,000
Revaluation decrease (7,000) 5,000 OCI&RS
2,000 - expense
FV at 31.12.x4 13,000
Solution:
General Journal
Expense
Loss on property revaluation (2,000)
Equity
Revaluation surplus -
Module Code and Module Title Title of Slides
Record the disposal of assets
❑ The disposal of assets involves eliminating assets from the accounting
records.
❑ The overall concept for the accounting for asset disposals is to reverse
both the recorded cost of the PPE and the corresponding amount of
accumulated depreciation.