Question 1:

Question 2:

Packers Limited (Packers) has a financial year end of 30 September. On 1 August 20x6, Packers purchased a piece of freehold land for $250,000 cash from the Singaporean government. In addition to the purchase price, Packers was required to pay 30% as a special form of stamp duty to the government for purchasing this land. Of this 30%,10% would be refundable to Packers in 5 years (i.e. 20% will not be refundable). The 30% stamp duty was fully paid on 31 December 206. A piece of freehold land, with comparable conditions and location as the freehold land recently purchased by Packers, was sold by an unrelated party in September 20x 6 for $350,000. Required (i) Prepare the journal entry to account for the purchase of the piece of frechold land on 1 August 206. (5 marks) (ii) Prepare the journal entries (if any) to account for the frechold land on 30 September 206 if Packers uses (a) the cost model; or (b) the revaluation model. Provide answers for both models. (4 marks) (iii) Prepare journal entries for each of the two models in (ii) above if on 30 September 207 the fair value of the land is $250,000. Kerry Limited (Kerry) is incorporated in Singapore and has a financial year end of 30 September. In October and November 20x6, Kerry removed unwanted structures on a piece of previously purchased freehold land that was intended for construction of a factory building for use in its business. The freehold land was purchased for $300,000 in May 206. The cost of removal and cleaning was $50,000 and this was paid in cash on 30 November 20x6. On 1 December 20x6, Kerry started the construction of a factory building on that freehold land. On 1 August 207, the construction was completed, and the building became ready for service. Total cost related to the construction was $880,000 and was fully paid for in cash on 1 August 207. Kerry estimates the building to have an economic life of 70 years and a useful life of 40 years with a residual value of $400,000. Kerry uses the straight-line depreciation method. On 1 October 207, Kerry had $300,000 in cash. Question No. 2 continues on page 5 Question 2 (continued) On 13 April 20x8, Kerry hired technicians to inspect, maintain, and repair the lights in the building. Total cost related to this inspection was $3,500 by cash on the same day. In September 20x8, Kerry built an extension to the building. The extension increased the floor area of the factory. The extension was completed on 30 September 208. Total cost related to this extension was $65,000 and was paid for in cash on the same date. Required (i) Prepare the journal entry for the removal and cleaning on 30 November 206. (2 marks) (ii) Prepare the journal entry for the recognition of the factory building on 1 August 20x7. (2 marks) (iii) Using the information provided, help prepare Kerry's adjusted trial balance (partial) on 30 September 208 for the relevant accounts. (8 marks)