Question
Vivians Corn Farm owned the following items of property, plant and equipment as at 30 June 2018: Land (at cost) Office building (at cost) Accumulated
Vivians Corn Farm owned the following items of property, plant and equipment as at 30 June 2018:
| Land (at cost) Office building (at cost) Accumulated depreciation |
150 000 (23 375) |
| RM120 000
126 625 |
|
| Water desalinator (at fair value) |
| 189 000 |
|
Additional information (at 30 June 2018)
(a) The straight-line method of depreciation is used for all depreciable items of property, plant and equipment. Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar.
(b) The office building was constructed on 1 April 2014. Its estimated useful life is 20 years and it has an estimated residual value of RM40 000.
(c) The water desalinator was purchased and installed on 2 July 2015 at a cost of RM200 000. On 30 June 2018, the desalination plant was revalued upwards by RM7,000 to its fair value on that day. Additionally, its useful life and residual value were re-estimated to 9 years and RM18 000 respectively.
The following transactions occurred during the year ended 30 June 2019:
(Note: All payments are made in cash.)
(d) On 1 January 2019, the corn farms owner decided to extend the office building by adding three new offices and a meeting room. The extension work started on 2 February and was completed by 28 March at a cost of RM49 000. The extension is expected to increase the useful life of the building by 4 years and increase its residual value by RM5000.
(e) On 30 June 2019, depreciation expense for the year was recorded. The fair value of the water desalination plant was RM165 000.
(f) On 30 June 2020, the water desalination plant was assessed to have a fair value of RM150,000 and the buildings fair value was RM170,000 with an expected useful life of 19 years and residual value of RM45,000.
Required
(Show all workings and round amounts to the nearest ringgit.
Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2019 and 30 June 2020 (narrations are not required).
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