Swimming Pool Note 7

TRIAL BALANCE:

Revenue		700,000
Cost of Sales	250,000
Selling Expenses	30,000
Swimming Pool	500,000
Trade Receivables	55,000
Bank		10,000

On 1 April 20X8 the company installed an outside swimming pool, jacuzzi and whirlpool into their most luxurious health and fitness centre at a cost of 500,000. They were granted planning permission on the basis that, at the end of the expected useful life of 20 years, they would be required to make good the site at an expected cost of 200,000.

The companys cost of capital is 8% and the discount factor at the end of 20 years is 0.215 and 19 years is 0.232.

No depreciation has yet been charged for the swimming pool.