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