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Property, Plant and Equipment 1 IAS 16 Property, Plant and Equipment: Problem Set 1. Tirah Metalworks purchased a new machine on October 1, 2005, at a cost of Rs 1,445,000. The machine’s estimated useful life at the time of the purchase was 6 years, and its residual value was Rs 120,000. Required: a. Prepare a complete depreciation schedule, beginning with calendar year 2001, under each of the methods listed below: 1. Straight-line. 2. Reducing Balance Method Calculate depreciation to nearest month (i.e. on the pro-rata basis) b. If Tirah Metal Works dispose off machine at the end of its useful life for Rs 200,000 calculate the gain or loss under each method. 2. The following items have been extracted from the cash flow statement of Abaseen Limited for the year ended 31 March 2007. Purchase of property, plant and equipment Rs 50,000 Loss on disposal of property, plant and equipment Rs 15,000 Proceeds from disposal of property, plant and Rs 30,000 equipment Depreciation charge Rs 60,000 If the net book value of property, plant and equipment was Rs 200,000 on 31 March 2007, what was the net book value per the balance sheet as at 31 March 2006? a. Rs 255,000 b. Rs 145,000 c. Rs 160,000 d. Rs 240,000 3. Accounting standard IAS 16 Property, Plant and Equipment makes a number of recognition, measurement and disclosure requirements with regard to tangible non-current assets. The information given below relates to three companies, each of which prepares accounts to 31 December. Gomal Ltd Gomal Ltd bought a factory machine on 30 June 2007 and paid a total of Rs 420,000. The supplier's invoice showed that this sum was made up of the following items: Rupees Manufacturer's list price 380,000 Less: Trade discount
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