Part c)

ABC Ltd purchased a machine for $120,000 on 1 January 2020 and started depreciating it over five years. Residual value was taken as $30,000. At 1 January 2021, a review of asset lives was carried out and the remaining useful life was expected 8 years, while residual value was estimated as nil.

Required

Calculate the depreciation charge of the machine for the year ended 31 December 2021 (6 marks)

Part d)

At December 31, 2020, the DEF Ltd Group, a sizeable listed company in Hong Kong has the following properties:

Property D

It has 9 floors that are currently rented out. 7 of them are rented out as office to external company, Lau & Chan & Co. The remaining 2 floors are rented out to a subsidiary of DEF Ltd to be used as their offices and showrooms.

Property E

It is a large warehouse that was previously used to store the company's inventories.As the government is planning to develop the area around the warehouse into a part with a lake, DEF Ltd decided to covert the warehouse into waterfront apartments for rental to individual tenants. On 30 November 2020, all inventories were removed from the warehouse and renovation work to convert the warehouse commenced on this date.

Property F

It is a five-star hotel owned and managed by DEF Ltd, the building has 30 floors. The first 10 floors of the hotel have been converted into a shopping mall with units rented out to luxury brand retailers and department stores. The top floor of the hotel has been converted into grand apartment and rented out to DEF Ltd Group's senior executive at market rtes.

Note: For each of buildings mentioned above, assume that each floor can be sold separately

Required

Explain how should DEF Ltd account for

1. property D in its consolidated financial statements (4 marks)
2. property E before and after 30 November 2020? (5 marks)
3. the first 10 floors of Property F that have been converted into shopping mall? (2
4. marks)
5. the top floor of Property F that has been converted into grand apartment (3 marks)

Note: no calculation is required in this part