Property, Plant and Equipment $($PPE$)$

TechMan has primarily leased its non$-$current assets since its inception. Given the post$-$pandemic market expansion and the company$$s growth, the management of TechMan is contemplating the purchase of a manufacturing facility. After exploring various options and negotiating, they decided to purchase a property comprising land and a factory for a total of $$1,100,000($GST inclusive$).$ This price is considered favorable compared to the fair market value, which is broken down as follows:

Assets Fair value

Land $$700,000$

Factory $$600,000$

Total $$1,300,000$

In addition to the purchase price, TechMan incurs several others expenses:

$$ Acquisition of new manufacturing equipment for $$165,000($GST inclusive$),$ with an expected life span of five years and a residual value of $$10,000.$

$$ Legal fees for land ownership transfer amounting to $$10,000($GST inclusive$).$

$$ Despite of having a useful life of $15$ years and estimated residual value of $$100,000,$ the factory need

some adjustments at the initial stage to support TechMan$$s operation. The factory refurbishment costs include $$20,000($GST exclusive$)$ for electrical upgrades and $$15,000($GST exclusive$)$ for safety equipment installation.

$$ Annual insurance for the property costing $$12,000($GST inclusive$).$

$$ Delivery and installation charges for the new equipment amounting to $$5,500($GST inclusive$),$ and a $5-$

year warranty costing $$3,300($GST inclusive$).$

$$ Equipment safety certification by an authorized body, costing $$4,400($GST inclusive$).$

$$ TechMan adopts the cost model for its newly purchased non$-$current assets.

Given the surge in demand recently, the business has seen a significant increase in the demand for its products. The owners believe that the existing non$-$current assets should be valued higher and it would be more appropriate to change to the revaluation model of measuring non$-$current assets.

Question $2$:

Calculate the annual depreciation expense over the life of both the factory and manufacturing equipment using at least two depreciation methods $($starting with year $1$ ending $30$ June $2023).$ Additionally, recommend the most suitable depreciation method for each asset and provide rationale for your choices. Based on your recommended methods, prepare the journal entries to record the depreciation for the first two years $($i$.$e$.,$ round to the nearest dollars$).$

To perform the above calculations, you are required to use the $$Template for Financial Modelling PPE$.$ You must use formulas in Excel to obtain the answers.

Question $3$:

Discuss why the owners of TechMan might consider switching from the cost model to the revaluation model for measuring its non$-$current assets in the post$-$pandemic period. Evaluate how this change in asset measurement affects the usefulness of financial information, referencing the fundamental qualitative characteristics outlined in the Conceptual Framework for Financial Reporting.

Payroll

With the growing demand for electronic components, TechMan has experienced an uptick in production requirements. To manage this increased workload, the company decided to hire two additional engineers. The new engineers were enrolled into the payroll system by the payroll team. It was determined that each engineer would earn a gross salary of $$4,000$ per fortnight. However, there are several deductions and on$-$ costs apply $($per fortnight$)$:

$1.$ PAYG withholding of $$1,016$ per person;

$2.$ Employer superannuation payment$1$;

$3.$ Payroll tax of $4\mathrm{.}25\%$;

$4.$ WorkCover of $2\%$;

$5.$ Employee contribution to superannuation of $$150$ per person; and

$6.$ Employee contributions to insurance fees of $$20$ per person.

Question $4$:

Upon receiving their first payment, the engineers were shocked because they received less than $$4,000$ per person for the fortnight. Record the necessary general journal entries in relation to total payroll and payroll deductions for one fortnight. Calculate and list the take$-$home pay that the new engineers will receive and explain to them why their net pay is less than the gross salary of $$4,000$ per fortnight.

Accounts Receivables

In addition to its primary operations, this year TechMan has expanded its business by selling specialized manufacturing tools and accessories. These products are sold both directly to end$-$users and to various retailers. To foster strong relationships with its retail partners, TechMan has adopted a lenient approach towards payment collections. The CFO, recognizing the need for a more structured approach to handle potential bad debts, has proposed shifting to the allowance method of accounting for doubtful debts. While the management is supportive of the allowance method, they are deliberating between two approaches: the percentage of net credit sales method and the ageing method.