- 1 Marks
FA – May 2013 – L1 – SA – Q33 – Partnership Accounts
This question tests the double-entry treatment when a partner introduces a non-current asset into a partnership.
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FA – May 2016 – L1 – SA – Q7 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)
A question regarding the journal entry required to correct an error in the recording of a non-current asset purchase.
Question
A company purchased a non-current asset for N4,500,000. The company’s accountant recorded the transaction in the company’s books by debiting the purchases account. Raise the journal entry to correct the error.
A. Dr. Purchases Account, Cr. Cash
B. Dr. Non-Current Assets Account, Cr. Cash
C. Dr. Purchases Account, Cr. Non-Current Assets Account
D. Dr. Non-Current Account, Cr. Purchases Account
E. Dr. Non-Current Register Account, Cr. Non-Current Asset Account
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FA – MAY 2015 – L1 – SA – Q10 – Correction of Errors
Identify the appropriate journal entry to correct the error of debiting a non-current asset to purchases.
Question
The accounting officer of a trading outfit wrongly debited the purchase of a non-current asset item to purchases account and credited it to the supplier’s account.
Which of the following journal entries is appropriate to correct the error?
A. Dr. Supplier’s account, Cr. Purchases account
B. Dr. Purchases account, Cr. Supplier’s account
C. Dr. Non-current asset account, Cr. Purchases account
D. Dr. Purchases account, Cr. Non-current asset account
E. Dr. Supplier account, Cr. Non-current asset account
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- Tags: Error Correction, Non-Current Asset, Purchases Account
- Level: Level 1
- Topic: Correction of errors
- Series: MAY 2015
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- 5 Marks
CR – Dec 2022 – L3 – Q2c -IFRS 5: Non-current assets held for sale and discontinued operations
Provide accounting treatment for Ayew Plc's plant reclassification under IFRS 5.
Question
Ayew Plc (Ayew) decided to dispose of one of its major production plants, which had become surplus to requirement. At 31 January 2021, all criteria were met for the plant to be classified as held for sale. On 31 July 2022, there was material evidence that the original sale plan would change and hence, it was considered not appropriate to retain the plant as held-for-sale. The plant is carried under the cost model.
Details of the plant are as follows:
| GH¢’million | |
|---|---|
| Cost (acquired on 1 August 2019) | 20 |
| Depreciation rate (straight line to nil residual value) | 10% |
| At 31 January 2022: | |
| Fair value | 14 |
| Costs to sell | 0.4 |
| At 31 July 2022: | |
| Recoverable amount | 15.2 |
Required:
In line with IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations, recommend how the above would be accounted for within the financial statements of Ayew for the year ended 31 July 2022.
(Total: 5 marks)
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- Tags: Fair Value, Held for Sale, Impairment, Non-Current Asset, Plant, Reclassification
- Level: Level 3
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- 1 Marks
FA – May 2013 – L1 – SA – Q33 – Partnership Accounts
This question tests the double-entry treatment when a partner introduces a non-current asset into a partnership.
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Report an error
- 1 Marks
FA – May 2016 – L1 – SA – Q7 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)
A question regarding the journal entry required to correct an error in the recording of a non-current asset purchase.
Question
A company purchased a non-current asset for N4,500,000. The company’s accountant recorded the transaction in the company’s books by debiting the purchases account. Raise the journal entry to correct the error.
A. Dr. Purchases Account, Cr. Cash
B. Dr. Non-Current Assets Account, Cr. Cash
C. Dr. Purchases Account, Cr. Non-Current Assets Account
D. Dr. Non-Current Account, Cr. Purchases Account
E. Dr. Non-Current Register Account, Cr. Non-Current Asset Account
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- 1 Marks
FA – MAY 2015 – L1 – SA – Q10 – Correction of Errors
Identify the appropriate journal entry to correct the error of debiting a non-current asset to purchases.
Question
The accounting officer of a trading outfit wrongly debited the purchase of a non-current asset item to purchases account and credited it to the supplier’s account.
Which of the following journal entries is appropriate to correct the error?
A. Dr. Supplier’s account, Cr. Purchases account
B. Dr. Purchases account, Cr. Supplier’s account
C. Dr. Non-current asset account, Cr. Purchases account
D. Dr. Purchases account, Cr. Non-current asset account
E. Dr. Supplier account, Cr. Non-current asset account
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- Tags: Error Correction, Non-Current Asset, Purchases Account
- Level: Level 1
- Topic: Correction of errors
- Series: MAY 2015
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- 5 Marks
CR – Dec 2022 – L3 – Q2c -IFRS 5: Non-current assets held for sale and discontinued operations
Provide accounting treatment for Ayew Plc's plant reclassification under IFRS 5.
Question
Ayew Plc (Ayew) decided to dispose of one of its major production plants, which had become surplus to requirement. At 31 January 2021, all criteria were met for the plant to be classified as held for sale. On 31 July 2022, there was material evidence that the original sale plan would change and hence, it was considered not appropriate to retain the plant as held-for-sale. The plant is carried under the cost model.
Details of the plant are as follows:
| GH¢’million | |
|---|---|
| Cost (acquired on 1 August 2019) | 20 |
| Depreciation rate (straight line to nil residual value) | 10% |
| At 31 January 2022: | |
| Fair value | 14 |
| Costs to sell | 0.4 |
| At 31 July 2022: | |
| Recoverable amount | 15.2 |
Required:
In line with IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations, recommend how the above would be accounted for within the financial statements of Ayew for the year ended 31 July 2022.
(Total: 5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Fair Value, Held for Sale, Impairment, Non-Current Asset, Plant, Reclassification
- Level: Level 3
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