QUESTION 2
Question 2 Little Toddlers (Pty) Ltd (hereafter Little Toddlers) is a company that has been operating in Windhoek and manufactures clothes for children. Little Toddlers Ltd purchased a plant on 1 January 2017 for N$ 5 700 000. The plant has a useful life of 25 years and a residual value of N$ 450 000. Little Toddlers Ltd has the intention of using the plant till the end of its economic useful life. Inland Revenue allows a wear-and- tear allowance over 25 years on the plant not proportioned for periods shorter than a year. The plant has been revalued for the first time during the 2020 financial year to its fair value of N$ 7 500 000. Little Toddlers Ltd realises any revaluation surplus which arise on the revaluation of property, plant and equipment to the retained earnings as the asset is used. Required: a) Please calculate the following if you assume that Little Toddlers Ltd re-values its assets at the end of the financial year: 1) Remaining useful life as at 1 January 2020 ii) Remaining useful life as at 31 December 2020 iii) Total depreciation over the asset's useful life iv) Historical carrying amount as at 1 January 2020 v) Historical carrying amount as at 31 December 2020 vi) Accumulated depreciation at 31 December 2020 vii) Net realisable value (NRV) as at 31 Dec 2020 viii) Gross realisable value ("GRV) as at 1 Jan 2017 If you assume that Little Toddlers Ltd re-values its assets at the end of the financial year, provide all the journal entries to account for the asset and the related revaluation of the asset in the financial records of Little Toddlers Ltd for the year ended 31 December 2020 if Little Toddlers Ltd accounts for revaluations in terms of either the proportional method or the elimination method. Deferred tax journal(s) are not required. Journal narrations are required. 1 mark will be allocated for communication skills. c) If you assume that Little Toddlers Ltd re-values assets at the beginning of the financial year, prepare the property, plant and equipment note which should be disclosed in the financial statements of Little Toddlers Ltd for the year ended 31 December 2020 if Little Toddlers Ltd accounts for revaluations in terms of either the proportional method or the elimination method. A total column, comparative figures and additional descriptions that should be part of the note are not required. Question 2 Little Toddlers (Pty) Ltd (hereafter Little Toddlers) is a company that has been operating in Windhoek and manufactures clothes for children. Little Toddlers Ltd purchased a plant on 1 January 2017 for N$ 5 700 000. The plant has a useful life of 25 years and a residual value of N$ 450 000. Little Toddlers Ltd has the intention of using the plant till the end of its economic useful life. Inland Revenue allows a wear-and- tear allowance over 25 years on the plant not proportioned for periods shorter than a year. The plant has been revalued for the first time during the 2020 financial year to its fair value of N$ 7 500 000. Little Toddlers Ltd realises any revaluation surplus which arise on the revaluation of property, plant and equipment to the retained earnings as the asset is used. Required: a) Please calculate the following if you assume that Little Toddlers Ltd re-values its assets at the end of the financial year: 1) Remaining useful life as at 1 January 2020 ii) Remaining useful life as at 31 December 2020 iii) Total depreciation over the asset's useful life iv) Historical carrying amount as at 1 January 2020 v) Historical carrying amount as at 31 December 2020 vi) Accumulated depreciation at 31 December 2020 vii) Net realisable value (NRV) as at 31 Dec 2020 viii) Gross realisable value ("GRV) as at 1 Jan 2017 If you assume that Little Toddlers Ltd re-values its assets at the end of the financial year, provide all the journal entries to account for the asset and the related revaluation of the asset in the financial records of Little Toddlers Ltd for the year ended 31 December 2020 if Little Toddlers Ltd accounts for revaluations in terms of either the proportional method or the elimination method. Deferred tax journal(s) are not required. Journal narrations are required. 1 mark will be allocated for communication skills. c) If you assume that Little Toddlers Ltd re-values assets at the beginning of the financial year, prepare the property, plant and equipment note which should be disclosed in the financial statements of Little Toddlers Ltd for the year ended 31 December 2020 if Little Toddlers Ltd accounts for revaluations in terms of either the proportional method or the elimination method. A total column, comparative figures and additional descriptions that should be part of the note are not required
