You are the director of Penny Farthing Limited (PFL).The company specialises in importing classic bicycles from overseas and then selling them in New Zealand.The company's financial year ends on 30 June.The company enters into the following transactions during the year:

1. The company purchases spare parts from a UK supplier for a total cost of 10,000.The order is placed on 12 June 2017, and the goods are shipped on 22 June 2017.Under the conditions of the contract, title to the goods does not pass until the goods are shipped by the supplier.Payment in respect of these inventories is due on 12 July 2017.The following spot rates apply:

12 June 2017 NZ1.00 = 0.55

22 June 2017 NZ1.00 = 0.57

30 June 2017 NZ1.00 = 0.56

12 July 2017 NZ1.00 = 0.58

REQUIRED:

Prepare all the journal entries for PFL to account for the above transaction.

(5 marks)

1. Since much of its stock is purchased from the UK, PFL purchased a portable storeroom (the asset) in London for 150,000, with settlement on 1 July 2015.The asset is depreciated at a rate of ten per cent on a straight line basis, and it is assumed that the asset will have no residual value.On 30 June 2017, the asset was revalued to 200,000, and is expected to have a remaining useful life of eight years, with no residual value.

1 July 2015 NZ1.00 = 0.51

30 June 2016 NZ1.00 = 0.54

30 June 2017 NZ1.00 = 0.56

REQUIRED:

Provide the journal entries for PFL to account for the portable storeroom to record:

1. The initial purchase of the asset.
2. Movements in the value of the asset as at 30 June 2016.
3. Movements in the value of the asset as at 30 June 2017.