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QUESTION 4 [ 3 4 marks ] Bookie Books Ltd is a publisher and distributor of textbooks for schools and universities. They have a 3
QUESTION
marks
Bookie Books Ltd is a publisher and distributor of textbooks for schools and
universities. They have a December year end. Below is the trial balance of Bookie
Books Ltd at December
Bookie Books Ltd uses the following subsequent measurement bases to value its
property, plant and equipment as well as methods to calculate its depreciation:
The residual value of all assets is zero.
The following are the transactions that occurred during the financial year ended
December :
The land was purchased by Bookie Books Ltd on the July with the
intention of building their own offices on the property in the future. The purchase price was R On January the fair value of the land was
determined to be R
Office equipment with a cost price of R was disposed of on the July
for R The office equipment was originally purchased on the January
No other additions or disposals of office equipment occurred during the year.
On the December the remaining office equipment had a value in use
of R and fair value less cost to sell of R
Bookie Books Ltd owns three industrial printing machines that were all
purchased on January for the same cost price of R each. The
three machines were modified on October in order to allow them to have
embossed printing functionalities, as this is what many customers were
requesting, especially for the front cover of their books. The cost of the
modification parts was R for each machine and will last as long as the
machines' remaining useful lives.
On December the company serviced the three machines at a cost of
R each. Servicing costs are incurred by the company every year to
ensure that the machines operate as expected.
There were no other modificationsadditions or disposals to machinery during
the year.
Bookie Books Ltd has one vehicle. The vehicle was purchased on January
REQUIRED:
Prepare the PPE reconciliation note as at December
Show all workings clearly.
The total column is not required. The notes on the accounting policy are not required.
Assume all assets are used from their respective purchase dates.
The mark allocation is as follows:
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