BACKGROUND INFORMATION

It was recently introduced that large Uzbek companies are to prepare financial statements in accordance with IFRS.

Let us consider in more detail the treatment, presentation and journal entries for selected items in IFRS financial statements.

Depreciation of fixed assets

Alpha LLC is part of an international holding and prepares its financial statements in accordance with IFRS and in accordance with the accounting policies adopted by the foreign parent company for all the companies within the Group.

On July 1, 20X3, Alpha acquired computer equipment for the total amount of UZS 50,000,000, vehicles for the total amount of UZS 300,000,000 and plant machinery for the total amount of UZS 1,300,000,000. For IFRS purposes in accordance with the accounting policy the company uses reducing balance method of depreciation for computer equipment at the rate of 30% p.a., straight line method for vehicles with the established useful life of 5 years and machine hours method for plant machinery which has total capacity of 10,000 hours. Abovementioned PPE items are expected to have the following residual values:

Computer equipment - UZS 5,000,000

Vehicles - UZS 40,000,000

Plant machinery - UZS 100,000,000

Required: TASK:

You need to prepare disclosure note schedule for the above PPE showing their book values, accumulated depreciation, depreciation charges and carrying amounts along with journal entries as of and for the years ended December 31, 20X4 and 20X3 considering the following:

Plant machinery has worked 1,000 hours in 20X3 and 3,000 hours in 20X4;

Calculate the amounts of depreciation expense using each method; Provide journal entries as appropriate.