Week 4 - 1. No impact, as land increases and asset...

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Suggested solutions to preparation questions – Week 4 Problem 8.11 1. 2009 2008 2007 Highest Profit LIFO FIFO FIFO Lowest Profit FIFO AVGE LIFO Difference $22000 $13000 $23000 Effect on net profit (70%: considering tax) $15400 $9100 $16100 2. The company should choose an inventory cost policy that is fair and appropriate for its circumstances and stick with it. The fact that various methods might produce higher or lower profits in various years is not a proper criterion for choice of a method. It smacks of manipulation. Problem 9.22
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Unformatted text preview: 1. No impact, as land increases and asset revaluation reserve increases. 2. This is a very large revaluation, and the revaluation is done by directors. There is no independent valuation. Problem 9.23 1. Building $200 000 Less accumulated depreciation Building $ Carrying amount / Book Value $140 000 60 000 2. Dr Accumulated depreciation - Building $60 000 Cr Building $60 000 Dr Building $260 000 Cr Revaluation reserve $260 000 Note: new terminology: Revaluation Reserve instead of Asset Revaluation Reserve....
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This note was uploaded on 03/19/2012 for the course ACCT 1511 taught by Professor Kim during the Three '10 term at University of New South Wales.

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