Axel Schulz is the owner of Wremen Fishing Charters. The business's final trial balance on 30 June 2012 (end of the reporting period) included the following balances: Processing Plant (at cost, purchased 4 April 2010) $148 650 Accumulated Depreciation- Processing plant (81 274) Charter Boats 291 200 Accumulated Depreciation- Boats 188 330 The following boats were owned at 30 June 2012: Boat Purchase date Cost Estimated useful life Estimated residual value 1 23 February 2o08 $62 000 5 years $3 000 2 9 September 2008 $66 400 6 February 2009 $3 400 $3 600 $3 800 5 years 3 $78 600 4 years 4 20 April 2010 $84 200 6 years Additional information Wremen Fishing Charters calculates depreciation to the nearest month using straight-line depreciation for all assets except the processing plant, which is depreciated at 30% on the diminishing-balance method. Amounts are recorded to the nearest pound. Part A The following transactions and events occurred during the year ended 30 June 2013: 2012 Traded in Boat 1 for a new boat (Boat 5) which cost 84 100. A trade-in allowance of 8900 was received and July the balance was paid in cash. Registration and stamp duty costs of 1500 were also paid in cash. Axel Schulz 26 estimated Boat 5's useful life and residual value at 6 years and 4120 respectively. Dec. Overhauled the processing plant at a cash cost of 62 660. As the modernisation significantly expanded the plant's operating capacity and efficiency, Axel Schulz decided to revise the depreciation rate to 25%. 4 2013 Boat 3 reached the end of its useful life but no buyer could be found, so the boat was scrapped. Feb. June Recorded depreciation. 30 Required Prepare general journal entries (narrations are required) to record the transactions and events for the year ended 30 June 2013. Part B On 26 March, Axel Schulz was offered fish-finding equipment with a fair value of 9500 in exchange for Boat 2. The fish-finder originally cost its owner 26 600 and had a carrying value of 9350 at the date of offer. The fair value of Boat 2 was 9100. Required If Axel Schulz accepts the exchange offer, what amount would the business use to record the acquisition of the fish- finding equipment? Why? Justify your answer by reference to the requirements of IAS 16 relating to the initial recognition of a property, plant and equipment item.