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QUESTION 5 i) On 1 January 202, Yoyo Bhd acquired a plant from Koko Bhd at a cost of RM2.4 million. In addition, Yoyo Bhd
QUESTION 5 i) On 1 January 202, Yoyo Bhd acquired a plant from Koko Bhd at a cost of RM2.4 million. In addition, Yoyo Bhd also incurred import duties and freight charges amounting to RM300,000 as well as an installation cost of the plant of RM120,000. The plant is depreciated on a straight line basis over 20 years. The following subsequent expenditures were incurred by Yoyo Bhd regarding the plant: 1. Service cost of RM54,800 per annum to maintain the plant. 2. RM80,000 on 1 January 206 to replace one of the components that was damaged. The production capacity of the plant remains unchanged. However, the operating costs has significantly reduced after the replacement. The carrying amount of the old component as at that date was RM56,000. Continued... NJ 6/8 BAC1634 FINANCIAL ACCOUNTING \& REPORTING 1 13 OCTOBER 2017 3. RM220,000 on 31 December 206 for the purchase of a new component to replace another old component. The production capacity of the plant is to replace another old compone increase with the new component in place. The carrying amount of the old component replaced was RM136,000. Required: a- Discuss the accounting treatment on the above transaction in compliance with the MFRS 116 Property, Plant and Equipment. (5 marks) b- Calculate the depreciation of the plant to be charged for the year ended 31 December 206
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