machinery – NBC Institute

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

Question

Ishola & Sons Limited purchased a moulding machine for N2,550,000 from Japan, the transport expenses amounted to N250,000, installation cost amounted to N150,000, and the annual maintenance is N170,000. At what cost will the moulding machine be stated in the statement of financial position?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Valuation, Financial Position, machinery
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: MAY 2012

FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications

This question relates to the impairment test of an asset, applying IAS 36.

Question

Due to a change in Pusiga Ltd’s production plans, an item of machinery with a carrying value of GH¢11 million at 31 December 2017 (after adjusting for depreciation for the year) may be impaired due to a change in use. An impairment test conducted on 31 December 2017 revealed its fair value less cost of disposal to be GH¢5 million. The machine is now expected to generate an annual net income of GH¢2 million for the next three years at which point the asset would be sold for GH¢2.4 million. An appropriate discount rate is 10%. Pusiga charges depreciation at 20% on a reducing balance method on machinery.

Note:

The present value of ordinary annuity of GH¢1 at 10% for one year, two years, and three years is 0.909, 1.736, and 2.487 respectively.
The present value of GH¢1 at 10% for one year, two years, and three years is 0.909, 0.826, and 0.751 respectively.

Required:
In accordance with IAS 36: Impairment of Assets, explain with justification the required accounting treatment in the financial statements of Pusiga Ltd for the year ended 31 December 2017.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Discounted Cash Flow, IAS 36, Impairment of Assets, machinery, Net Income
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: NOV 2018

MA – May 2019 – L2 – Q1a – Decision making techniques

Assess the financial impact of purchasing a new machine on a manufacturing company’s profitability.

Question

Hukportie Ltd is a manufacturer of product “Okwada” which is sold for GH¢5 per unit. Variable costs of production are currently GH¢3 per unit, and fixed costs excluding depreciation is GH¢350,000. The current machine which was purchased for GH¢120,000 has a written down value of GH¢20,000 and a resale value of GH¢12,000. This can however be used for the next four years.

A new machine is available which would cost GH¢90,000. This could be used to make product “Okwada” for a variable cost of only GH¢2.50 per unit. Fixed costs, however, would increase by GH¢7,500 per annum as a direct consequence of purchasing the machine. The machine would have an expected life of 4 years and a resale value after that time of GH¢8,000. Sales of product Okwada are estimated to be 75,000 units per annum.

Hukportie limited expects to earn at least 12% per annum from its investments. Taxation and depreciation should be ignored.

Required:

Advise whether Hukportie Ltd should purchase the new machine. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Budgeting, Cost savings, Decision Making, machinery, Net Present Value
Level: Level 2

Topic: Decision making techniques
Series: MAY 2019

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Valuation, Financial Position, machinery
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: MAY 2012

FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications

This question relates to the impairment test of an asset, applying IAS 36.

Question

Note:

The present value of ordinary annuity of GH¢1 at 10% for one year, two years, and three years is 0.909, 1.736, and 2.487 respectively.
The present value of GH¢1 at 10% for one year, two years, and three years is 0.909, 0.826, and 0.751 respectively.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Discounted Cash Flow, IAS 36, Impairment of Assets, machinery, Net Income
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: NOV 2018

MA – May 2019 – L2 – Q1a – Decision making techniques

Assess the financial impact of purchasing a new machine on a manufacturing company’s profitability.

Question

Hukportie limited expects to earn at least 12% per annum from its investments. Taxation and depreciation should be ignored.

Required:

Advise whether Hukportie Ltd should purchase the new machine. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Budgeting, Cost savings, Decision Making, machinery, Net Present Value
Level: Level 2

Topic: Decision making techniques
Series: MAY 2019

Question Tag: machinery

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications

This question relates to the impairment test of an asset, applying IAS 36.

MA – May 2019 – L2 – Q1a – Decision making techniques

Assess the financial impact of purchasing a new machine on a manufacturing company’s profitability.

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications

This question relates to the impairment test of an asset, applying IAS 36.

MA – May 2019 – L2 – Q1a – Decision making techniques

Assess the financial impact of purchasing a new machine on a manufacturing company’s profitability.

Our offerings

Contact Info

Customer

Get In Touch

Question Tag: machinery

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

You're reporting an error for "FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)"

FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications

This question relates to the impairment test of an asset, applying IAS 36.

You're reporting an error for "FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications"

MA – May 2019 – L2 – Q1a – Decision making techniques

Assess the financial impact of purchasing a new machine on a manufacturing company’s profitability.

You're reporting an error for "MA – May 2019 – L2 – Q1a – Decision making techniques"

FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)

Calculating the cost of a moulding machine to be stated in the financial statement.

You're reporting an error for "FA – May 2012 – L1 – SA – Q29 – Accounting for Property, Plant, and Equipment (IAS 16)"

FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications

This question relates to the impairment test of an asset, applying IAS 36.

You're reporting an error for "FR – Nov 2018 – L2 – Q2b- Financial Reporting Standards and Their Applications"

MA – May 2019 – L2 – Q1a – Decision making techniques

Assess the financial impact of purchasing a new machine on a manufacturing company’s profitability.

You're reporting an error for "MA – May 2019 – L2 – Q1a – Decision making techniques"

Our offerings

Contact Info

Customer

Get In Touch

admin