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Timber Kings Ltd ( Timber Kings ) is a company that manufactures and distributes high end custom - made timber furniture. Timber Kings is a
Timber Kings Ltd Timber Kings is a company that manufactures and distributes high end custommade timber furniture. Timber Kings is a registered VAT vendor and has a financial reporting date of December. The following details relates to assets owned by Timber Kings: Plant Timber Kings purchased a manufacturing plant on January at a cost of N$ VAT inclusive The manufacturing plant was tested at a cost of N$ and the samples manufactured during testing were sold for N$ The plant was available for use on March Timber Kings is required to dismantle the plant and restore the site at the end of the plants useful life. It is estimated that it will cost N$ to restore and dismantle the machine at the end of year Timber Kings spent N$ on advertising the product to be manufactured by the plant. Due to initial operating inefficiencies, a total loss of N$ was incurred in the first year of operation. Land Timber Kings owns land which was acquired on January for N$Timber Kings also paid N$ transfer duty to to acquire the land. Additional N$VAT inclusive was incurred to service the land before any construction could take place and was complete on April Office buildings Various office buildings were erected on the acquired piece of land. The total costs incurred to erect the office buildings amounted to N$VAT inclusive Construction of all the office buildings were completed on June The office buildings were ready for use on this date. The staff moved into the office buildings during the first week of January The total useful life of the office buildings was initially estimated to be years with no residual value. The useful life and residual value estimate remained unchanged to date. The office buildings were revalued for the first time to its fair value of N$ on December and subsequently to a fair value of N$ on December Accounting policies and other information The plant and office buildings is accounted for using the revaluation model in terms of IAS Property, Plant and Equipment, and are revalued at the end of the financial year using the gross replacement value method. Land is accounted for under the cost model in terms of IAS Property, Plant and Equipment. Timber Kings use the straightline method to depreciate all Property, Plant and Equipment. Any revaluation surplus is regarded to realise over the remaining useful life of the underlying asset as the asset is being used. Assume that all amounts exclude VAT except if stated otherwise. Assume that the normal credit terms are days for all years under consideration. Assume an after tax discount rate of per annum compounded annually as appropriate for all years under consideration. Assume a normal tax rate of REQUIRED: a Calculate the initial cost of the manufacturing plant to be recognised in the financial statements of Timber Kings Ltd b Prepare an extract of the property, plant and equipment note to be disclosed in the financial statements of Timber Kings Ltd for the financial year ended December Only include the following classes of assets as part of the note: Land; and Office buildings. Accounting policy notes, a total column and comparative figures are not required. Additional descriptions as part of disclosure notes are not required. Communication skills presentation and layout Total marks
Timber Kings Ltd Timber Kings is a company that manufactures and distributes high end custommade timber furniture. Timber Kings is a registered VAT vendor and has a financial reporting date of December. The following details relates to assets owned by Timber Kings:
Plant
Timber Kings purchased a manufacturing plant on January at a cost of N$
VAT inclusive The manufacturing plant was tested at a cost of N$ and the samples
manufactured during testing were sold for N$ The plant was available for use on
March Timber Kings is required to dismantle the plant and restore the site at the end of the plants useful life. It is estimated that it will cost N$ to restore and dismantle the machine at the end of year Timber Kings spent N$ on advertising the product to be manufactured by the plant. Due to initial operating inefficiencies, a total loss of N$ was incurred in the first year of operation.
Land
Timber Kings owns land which was acquired on January for N$Timber Kings also paid N$ transfer duty to to acquire the land. Additional N$VAT inclusive was incurred to service the land before any construction could take place and was complete on April
Office buildings
Various office buildings were erected on the acquired piece of land. The total costs incurred to erect the office buildings amounted to N$VAT inclusive Construction of all the
office buildings were completed on June The office buildings were ready for use on this date. The staff moved into the office buildings during the first week of January The total useful life of the office buildings was initially estimated to be years with no residual value. The useful life and residual value estimate remained unchanged to date.
The office buildings were revalued for the first time to its fair value of N$ on December and subsequently to a fair value of N$ on December
Accounting policies and other information
The plant and office buildings is accounted for using the revaluation model in terms of IAS Property, Plant and Equipment, and are revalued at the end of the financial year using the gross replacement value method.
Land is accounted for under the cost model in terms of IAS Property, Plant and Equipment.
Timber Kings use the straightline method to depreciate all Property, Plant and Equipment.
Any revaluation surplus is regarded to realise over the remaining useful life of the underlying asset as the asset is being used.
Assume that all amounts exclude VAT except if stated otherwise.
Assume that the normal credit terms are days for all years under consideration.
Assume an after tax discount rate of per annum compounded annually as appropriate for all years under consideration.
Assume a normal tax rate of
REQUIRED:
a Calculate the initial cost of the manufacturing plant to be recognised in the financial statements of Timber Kings Ltd
b Prepare an extract of the property, plant and equipment note to be disclosed in the financial statements of Timber Kings Ltd for the financial year ended
December Only include the following classes of assets as part of
the note:
Land; and
Office buildings.
Accounting policy notes, a total column and comparative figures are not
required. Additional descriptions as part of disclosure notes are not required.
Communication skills presentation and layout
Total marks
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