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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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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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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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Find Related Questions by Tags, levels, etc.
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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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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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.
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