CAF-01: FAR1 Suggested Solution: Test 5

Solution 1 M
Hayat Industries Limited (HIL)
Notes to the Financial statements
For the year ended June 30, 2020 1.25
1. Property, plant and
equipment: Land Buildings Plant Vehicles
-------------- Rs. in '000' --------------
Gross carrying amount

Opening balance 100,000 70,000 180,000 8,800 1

Transfer - (17,500) - - 0.25
Revaluation (W-1) : (W-2) 20,000 (17,500) - - 0.5

Addition (W-3) - - 102,840 1,800 0.5

Disposal - - - (1,000) 0.25

Closing balance 120,000 35,000 282,840 9,600

Accumulated depreciation

Opening balance - 14,000 60,000 4,000 0.75

Depreciation (W-2) : (W-4) - 3,500 14,571 1,068 0.75

Transfer - (17,500) - 0.25

Disposal (W-4.1) - - (352) 0.25

Closing balance (-) (-) (74,571) (4,716)

Written down value 120,000 35,000 208,269 4,884 1

1.1
Measurement basis Revaluation Revaluation Cost model Cost model
2
Useful life / depreciation rate Infinte 15 years 10-15 years 20%
Straight
Depreciation method - line Straight line

1.2 The last revaluation was performed on 30 June 2020 by Samajhdar Consultants, an 0.5
independent firm of valuers.

1.3 Had there been no revaluation, the carrying value of land and buildings as on
30 June 2020 would have been: Land Buildings
------- Rs. in '000' ------

Cost (100,000 + 12,000) : (70,000 - 20,000) 112,000 50,000 2

Less: Accumulated depreciation - (12,500) 0.5

Written down value 112,000 37,500

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1.4 Movement in revaluation surplus Land Buildings
------- Rs. in '000' -------
Opening (1.7.2019) (12,000) 16,000 0.5
Arose during the year 20,000 - 0.25
Transferred to retained earnings / adjusted - (16,000) 0.25
Closing (30.6.2020) 8,000 -
Workings
1 Revaluation of land
Date Description Land R/S P/L
30.6.2019 WDV 100,000 (12,000) 0.5
30.6.2020 Revaluation surplus (bal.) 20,000 8,000 12,000 0.75
30.6.2020 Revalued amount 120,000 8,000 -

2 Revaluation of buildings
Date Description Buildings R/S P/L
30.6.2019 WDV (70,000 - 14,000) 56,000 16,000 0.5
30.6.2020 Dep. (56,000 / 16) : (16,000 / 16) (3,500) (1,000) 0.5
30.6.2020 WDV 52,500 15,000
30.6.2020 Revaluation surplus (bal.) (17,500) (15,000) (2,500) 0.75
30.6.2020 Revalued amount 35,000 - (2,500)

3 Cost of plant
Construction payments 120,000 0.25
Borrowing cost capitalised (W-3.1) 2,840 0.25
Government grant (20,000) 0.25
102,840
3.1 Borrowing cost to be capitalised
Interest expense on general loan:
(12,000 x 12% x 7 / 12) 840
(48,000 x 12 % x 5 / 12) 2,400 3,240 0.5
Interest saving due to grant (20,000 x 12% x 2 / 12) (400) 0.25
2,840
4 Depreciation expense for the year ended 30.06.2020
Plant
On opening (180,000 / 15) 12,000 0.25
On addition (102,840 / 10) x 3 / 12 2,571 0.25
14,571
Vehicle
On opening [(8,800 - 4,000) - 720 (W-4.1)] x 20% 816 0.75
On addition (1,800 x 20%) x 6 / 12 180 0.25
On disposal (W-4.1) 72 0.25
1,068

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 4.1 Acc. Dep. and WDV of disposal
1.1.18 Cost 1,000
30.6.18 Depreciation (1,000 x 20%) x 6 / 12 (100)
30.6.18 WDV 900
30.6.19 Depreciation (900 x 20%) (180)
30.6.19 WDV 720
1.1.20 Depreciation (720 x 20%) x 6 / 12 (72)
1.1.20 WDV 648 0.5
Accumulated depreciation (1,000 - 648) 352 0.5
20

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