Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Annbul is a company in real estate sector . The balances of fixed asset accounts as at the beginning of the year and additions during

Annbul is a company in real estate sector. The balances of fixed asset accounts as at the beginning of the year and additions during the year were as follows:

Cost or valuation

1 November 2000

Accumulated depreciation

Additions during the year

Sh.'000'

Sh.'000'

Sh.'000

Freehold land and buildings

157,000

-

7,600

Leasehold land and buildings(Over 50 years)

121,800

-

3,800

Leasehold land and buildings(Under 50 years)

60,200

5,800

-

Furniture and equipment

150,800

52,200

1,800

  1. The company does not provide for depreciation on freehold properties or properties held on lease with 50 years or more to run at the balance sheet date. Properties held on lease with less than 50 years to run are depreciated over the unexpired term. Items of equipment are depreciated over their estimated useful life.
  1. Some of the leasehold property in the books costing Sh.7, 500,000 had just 50 years remaining on the lease in October 2018 and has not yet been transferred to the under 50 years category.
  2. Disposals during the year included the following:

Cost

Accumulated depreciation

Sale proceeds

Sh.`000'

Sh.`000'

Sh.'000.'

Freehold land and buildings

3,600

-

4,800

Leasehold under 50 year

2,300

1,700

960

All the sale proceeds have been included in the revenue; no other adjustment has been made.

The determination of depreciation expense for the year included in the trial balance above has correctly been done for those properties not disposed of and included in the under 50 years category at the beginning of the year.

  1. Freehold land was revalued on an existing use basis by a professional valuer but the Surplus of Sh.6,000.000 has not yet been brought into account.

Required:

  1. A schedule showing property plant and equipment movements for the year ended 31 October 2019.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Auditing Journal Notes Checklists Observations Evidence Questions Log

Authors: Leon Edward

1st Edition

1729431569, 978-1729431566

More Books

Students also viewed these Accounting questions