Use the following information to answer the questions below:

	01.01.21	31.12.21	31.12.21
	RC=MV	Replacement Cost (RC)	*Market Value (MV)
Equipment	298255	366037	200,000
Accumulated Depreciation on Equipment	(150,000)	?	?

*MV is also known as Selling price. The Consumer Price Index was 100 at the start of the year and 110 at the end of the year. Equipment is depreciated at 10% per annum with no residual value. At the start of the year, it had been depreciated by 5 years. Required: Using current cost accounting, calculate: i) Depreciation expense on equipment for 2021. Do not include $ sign, do not include commas or spaces - just type in answer. Your answers can be provided to TWO decimal places.

Answer:

Question 2

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Marked out of 2.50

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Using same scenario from (i) calculate:

ii) Backlog depreciation on equipment for 2021.

Answer:

Question 3

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Marked out of 1.00

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Questions (3), (4) & (5) are all based on same scenario and is independent of Questions (1) & 2).

On 1 January 2021, HK Trading commenced a retail business, which buys and sells fuel. He started the business by purchasing 9378 liters of fuel. The fuel was purchased at a cost of $2.9 per litre. During the year, all the fuel was sold for $11.8 per litre. By the end of the year, the cost of the fuel was $3.4 per litre.

Required

What is the operating profit made during the period?

Do not include $ sign, do not include commas or spaces - just type in answer. Your answers can be provided to TWO decimal places.

a.

94717.80

b.

85152.24

c.

104283.36

d.

81963.72

e.

78775.20

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Question 4

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Marked out of 2.00

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On 1 January 2021, HK Trading commenced a retail business, which buys and sells fuel. He started the business by purchasing 9378 liters of fuel. The fuel was purchased at a cost of $2.9 per litre. During the year, all the fuel was sold for $11.8 per litre. By the end of the year, the cost of the fuel was $3.4 per litre.

Required

What is the realized holding gain for HK Trading?

Answer:

Question 5

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Marked out of 2.00

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On 1 January 2021, HK Trading commenced a retail business, which buys and sells fuel. He started the business by purchasing 9378 liters of fuel. The fuel was purchased at a cost of $2.9 per litre. During the year, all the fuel was sold for $11.8 per litre. By the end of the year, the cost of the fuel was $3.4 per litre.

Required

What is the profit distributed to shareholders under financial capital?

a.

102501.54

b.

105221.16

c.

83464.20

d.

88903.44

e.

97062.30