Seminar 02 Week 03 - 1001-student

Seminar 02 Week 03 - 1001-student - ACCT1002 Seminar 2,...

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Unformatted text preview: ACCT1002 Seminar 2, Week 3 Non-Current Assets SEMINAR 2 ACTIVITY Blue Sky Laws Limited Balance Sheet (Partial) as at 30 June 2009 Property, plant and equipment Land 2,000,000 Buildings 15,300,000 Accumulated depreciation – buildings (5,355,000) 9,945,000 Equipment 7,500,000 Accumulated depreciation – equip. (2,250,000) 5,250,000 Total property, plant and equipment 17,195,000 The following cash transactions occurred during the year ending 30 June 2010: 1 August Purchased land for $5,600,000, which included acquisition costs of included stamp duty of $260,000, lawyer’s fees of $20,000. 1 October Equipment acquired on 1/1/05 for $450,000 was sold for $300,000. 1 December Land purchased on 25/7/01 for $500,000 was sold for $800,000. 1 January Equipment was purchased for $980,000. Purchase and installation costs were insurance during shipping of $5,000 and installation and testing costs of $15,000. 30 June Equipment that cost $120,000 when it was purchased on 1/6/97 was scrapped. Additional Information: Buildings and equipment are depreciated via the straight line method Estimated useful life of buildings is 40 years with no residual value. Estimated useful life of equipment is 10 years with no residual value. Page 1 of 20 Required: (a) Journalise the transactions. (b) Record the adjusting entries for depreciation for the year ended 30 June 2010. (c) Prepare the PPE assets section of the Balance Sheet at 30 June 2010. Page 2 of 20 a) Journalising the Transactions 1 Aug Land 5,600,000 Cash 5,600,000 (Purchase of Land – includes stamp duty, lawyer’s fees and agent’s commission) 1 Oct Depreciation Expense 11,250 Accumulated Dep’n – Equipment 11,250 (Recording depreciation up to the date of sale) Calculation: Depreciation for 3 months 450,000 x 1/10 x 3/12 11,250 1 Oct Cash 300,000 Accumulated Dep’n – Equipment 213,750 Equipment 450,000 Gain on Disposal 63,750 (Recording disposal of equipment and resulting gain) Calculation: 1/1/05 Cost (1/1/05) 450,000 30/6/05 .5 Less Accum. Dep’n – Equipment 213,750 30/6/06 1 [(450,000 x 1/10 x 4.75yrs)] 30/6/07 1 WDV value at date of sale 236,250 30/6/08 1 Cash proceeds 300,000 30/6/09 1 Gain on disposal 63,750 1/10/09 .25 1 Dec Cash 800,000 Land 500,000 Gain on Disposal 300,000 (Sale of land) 1 Jan Equipment 1,000,000 Cash 1,000,000 (Purchase of equipment) 30 Jun Accumulated Dep’n - Equipment 120,000 Equipment 120,000 (Scrap equipment purchased 1/6/97) Page 3 of 20 b) Recording the depreciation expense at year end 30 June Depreciation Expense 382,500 Accumulated Dep’n – Buildings 382,500 (Depreciation of buildings) Calculation: 15,300,000 x 1/40 382,500 30 June Depreciation Expense 743,000 Accumulated Dep’n – Equipment 743,000 (Depreciation of equipment) Calculation: 6,930,000* x 1/10 693,000 1,000,000 x 1/10 x 6/12 50,000 743,000 *(7,500,000 - 450,000 - 120,000) Page 4 of 20 c) Posting to the general ledger (not a requirement but may help understanding of the Balance sheet at year end, also useful for doing cashflows later) Page 5 of 20 Land...
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This note was uploaded on 06/10/2011 for the course ECON 1001 taught by Professor - during the Three '07 term at University of Sydney.

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Seminar 02 Week 03 - 1001-student - ACCT1002 Seminar 2,...

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