On 1 October 20X5 Dearing acquired a
machine
under the following terms:
$000
Manufacturer’s base price
1,050
Trade discount (applying to base price only)
20%
Freight charges
30
Electrical installation cost
28
Staff training in use of machine
40
Pre-production testing
22
Purchase of a three-year maintenance contract
60
Estimated residual value
20
On the same date Dearing purchased an
excavator
for $1,260,000 with an estimated residual value of
$60,000; details relating to the excavator are as follows:
Hours
Estimated life in machine hours
6,000
Hours used – year ended 30 September 20X6
1,200
– year ended 30 September 20X7
1,800
– year ended 30 September 20X8
850
Dearing held a
property
that at 1 October 20X5 had a carrying amount of $2,620,000 and a remaining
useful life of 40 years. At 30 September 20X6 the property was revalued to $2,800,000. This property
had previously suffered a fall in value of $125,000 which had been expensed to profit or loss.
Required:
DISCUSS the accounting treatments for the above non-current assets in accordance to
IAS 16
Property, plant and equipment
.
a) Cost capitalisation of machine as at 1 October 20X5.
(10 marks)
b) Carrying amount and Depreciation charged of excavator for the year ended 30 September
(10 marks)
c) Revaluation surplus, Depreciation charged and Carrying amount of property as at 30
September 20X6.
(10 marks)