DEF Ltd started to construct a factory on 1 April 2020; it incurred $40 million and...
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DEF Ltd started to construct a factory on 1 April 2020; it incurred $40 million and $100 million on April 2020 and 1 October 2020 respectively on the construction. The construction would be financed by pool of funds dentrally managed by DEF Ltd. The pool included a loan (8% per annum) of $192 million (Loan D) and a loan (9% per annum) of $64 million (Loan E). DEF Ltd borrowed the loan D since 1 October 2018 and successfully negotiated with Hang Fung Bank for loan E on 1 July 2020. The construction was still in progress as at 31 March 2021. Loan D and E were still outstanding as at 31 March 2021. Required Briefly explain how the interest on Loan D and E should be reported in DEF Ltd's financial statements for the year ended 31 March 2021. (6 marks) Detailed calculation is necessary to show. (24 marks) (Total: 30 marks) On January 1, 2019, GHI Limited purchased a piece of machinery for production of goods. The purchase price of the machinery was $335,000. GHI Limited paid cash on the date of purchase. GHI Limited estimated that the machinery has an expected useful life of 4 years with a residual value of $15,000 on December 31, 2022. On February 15, 2021, GHI Limited disposed of machinery for cash amount of $179,000. GHI Limited adopts revaluation model for measuring machinery. For items with revaluation, it is GHI Limited's policy to eliminate accumulated depreciation against gross carrying amount of asset in a revaluation. GHI Limited usually depreciates machinery of similar type on a straight line basis. Full year of depreciation is to be charged in the year of purchase and none to be charged in the year of disposal. GHI Limited revalued the machinery twice on December 31, 2019 and December 31, 2020 and the revalued amounts were $264,000 and $185,000 respectively. Required In accordance with the requirement of IFRS (i.e. HKAS 16 Property, Plant and Equipment, prepare all journal entries that GHI Limited should make relating to the machinery: a. For the year ended December 31, 2019 and 2020. b. For the disposal of the machinery on February 15, 2021 (Total: 20 marks) (14 marks) (6 marks) DEF Ltd started to construct a factory on 1 April 2020; it incurred $40 million and $100 million on April 2020 and 1 October 2020 respectively on the construction. The construction would be financed by pool of funds dentrally managed by DEF Ltd. The pool included a loan (8% per annum) of $192 million (Loan D) and a loan (9% per annum) of $64 million (Loan E). DEF Ltd borrowed the loan D since 1 October 2018 and successfully negotiated with Hang Fung Bank for loan E on 1 July 2020. The construction was still in progress as at 31 March 2021. Loan D and E were still outstanding as at 31 March 2021. Required Briefly explain how the interest on Loan D and E should be reported in DEF Ltd's financial statements for the year ended 31 March 2021. (6 marks) Detailed calculation is necessary to show. (24 marks) (Total: 30 marks) On January 1, 2019, GHI Limited purchased a piece of machinery for production of goods. The purchase price of the machinery was $335,000. GHI Limited paid cash on the date of purchase. GHI Limited estimated that the machinery has an expected useful life of 4 years with a residual value of $15,000 on December 31, 2022. On February 15, 2021, GHI Limited disposed of machinery for cash amount of $179,000. GHI Limited adopts revaluation model for measuring machinery. For items with revaluation, it is GHI Limited's policy to eliminate accumulated depreciation against gross carrying amount of asset in a revaluation. GHI Limited usually depreciates machinery of similar type on a straight line basis. Full year of depreciation is to be charged in the year of purchase and none to be charged in the year of disposal. GHI Limited revalued the machinery twice on December 31, 2019 and December 31, 2020 and the revalued amounts were $264,000 and $185,000 respectively. Required In accordance with the requirement of IFRS (i.e. HKAS 16 Property, Plant and Equipment, prepare all journal entries that GHI Limited should make relating to the machinery: a. For the year ended December 31, 2019 and 2020. b. For the disposal of the machinery on February 15, 2021 (Total: 20 marks) (14 marks) (6 marks)
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Related Book For
Intermediate Accounting
ISBN: 978-1118742976
16th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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