Question
1. On 1 January 2015, Russi Ltd constructed an electricity plant. The cost of the building and associated technology was $1,000,000. The license to operate
1.
On 1 January 2015, Russi Ltd constructed an electricity plant. The cost of the building and associated technology was $1,000,000. The license to operate and architects fees amounted to $500,000. The dismantling cost was expected to be $800,000 at the end of plants 10-year useful life. The discount rate was 10%.
The residual value is expected to be $8,435. The plant is expected to generate benefits evenly throughout the years. At the end of 2018, it sells the plant for $1,000,000 cash.
What is the amount of loss on sale?
A.
$90, 000
B.
$98, 435
C.
$95, 000
D.
$88, 435
2.
The equity of Suresh Ltd on 30 June 2019 was as follows:
Share capital (issued at $4, fully paid) Asset revaluation surplus | $ | 200 000 700 000
|
Suresh Ltd decided to offer all the shares to their management as options, at an issue price of $0.65 per option. Each option allows the holder to subscribe for one ordinary share at an exercise price of $2.80 per share on or before 1 July 2020. All the options were purchased by management. By 1 July 2020, 80% of the options issued were exercised and shares were issued. The remaining options lapsed.
Which of the following is a correct entry?
A.
cash |
| $ 112,500.00 |
|
| share options |
| $ 112,500.00 |
B.
cash |
| $ 42,500.00 |
|
| share options |
| $ 42,500.00 |
C.
cash |
| $ 32,500.00 |
|
| share options |
| $ 32,500.00 |
D.
cash |
| $ 112,000.00 |
|
| share options |
| $ 112,000.00 |
3.
On 1 January 2015, Russi Ltd constructed an electricity plant. The cost of the building and associated technology was $1,000,000. The license to operate and architects fees amounted to $500,000. The dismantling cost was expected to be $800,000 at the end of plants 10-year useful life. The discount rate was 10%.
The residual value is expected to be $8,435. The plant is expected to generate benefits evenly throughout the years. At the end of 2018, it sells the plant for $1,000,000 cash.
What is the carrying amount of the plant at the end of 2018?
A.
$2, 099, 435
B.
$1, 079, 434
C.
$1, 088, 434
D.
$1, 079, 435
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