- 20 Marks
FA – May 2021 – L1 – SB – Q3 – Accounting for Property, Plant, and Equipment (IAS 16)
The question involves calculation of gain or loss on disposal of assets and disclosure of PPE movement under IAS 16.
Question
Super Limited trades in farm feeds. The following information was extracted from its books as at 1 July 2018.
| Description | Amount (₦) |
|---|---|
| Property Cost | 6,000,000 |
| Plant and Machinery | 2,419,000 |
| Motor Vehicles | 585,000 |
| Accumulated Depreciation – Property | 1,200,000 |
| Accumulated Depreciation – Plant | 687,000 |
| Accumulated Depreciation – Motor Vehicles | 210,000 |
During the year ended 30 June 2019, the following transactions took place:
(i) Additions to plant amounted to ₦231,000.
(ii) A plant that cost ₦415,500 with accumulated depreciation of ₦293,000 was sold for ₦129,000.
(iii) A new car was bought for ₦61,500, and a part-exchange allowance of ₦15,871 was received against an old car. The old car originally cost ₦55,548 and had accumulated depreciation of ₦39,536.
(iv) Depreciation is charged on PPE at the following rates:
- Property: 2% p.a. straight line
- Plant: 20% p.a. straight line
- Motor Vehicles: 25% p.a. reducing balance
Required:
a) Calculate the gain or loss on the disposal of plant and the old car.
b) Show the disclosure (schedule of movement) under IAS 16 for the non-current assets for the year ended 30 June 2019.
Find Related Questions by Tags, levels, etc.
- Tags: Depreciation, Disposal of Asset, Financial Statements, Plant and Equipment, Property
- Level: Level 1