Tutorial 7 (page 469)

Jane Lazar
Question 1,4,6,7
1)
a) Plant net value cost
RM
Cost Price 1,200,000
Less: Trade Discount (1,200,000 × 10%) (120,000)
1,080,000
Shipping and handling 16,000
Pre-production 25,000
Site Preparation (12,000 + 34,000 + 36,000
– 12,000) 70,000
Dismantling cost (10,000 + 5,000) × 0.75 11,250
Net volume cost of plant 1,202,250
*11,250 = interest

b) Robin
Statement of Profit or Loss and other comprehensive income
RM
Depreciation on plant
(1,202,250 ÷ 26,000) ×1/5 235,250
Finance cost
Interest – 11,250 × 6%) 675

c) Robin
Statement of financial position
As at year end 1
RM
Plant, Property and Equipment 1,202,250
Less: All Depreciation 235,250
967,000
Non-current liability
Provision for dismantling (11,250 + 675) 11,920

*Journal entry for provision for dismantling

Interest 11,920

Dismantling cost 11,920

4)
Components RM, Million Depreciation Carrying
Per annum For x4 amount on
31.12.x4
RM, Million
Engine (old) 40 + 37.5 150 – 37.5
120 /3 40 = 77.5 million =112.5 million
(new) 150/4 37.5 - -
Body 500/10 50 × 3 150 million 500 – 150
= 150 =350 million
Furniture and Fittings 120/5 (120 − (24 15.25 million 122 - 15.25
× 2 106.75
+ 50)/8

The carrying amount of the old engine of RM 122 million is derecognised. The new engine is
depreciated over 4 years. The subsequent expenditure on upgrading the furniture and fittings
is capitalised and the revised carrying amount is depreciated over 5 years. Change in the
estimated useful life is a change in accounting estimation. The repainting does not meet the
recognition criteria and so it is written off as an expense.
(I am not sure for this question)

6)
Date Accounts Title Debit (RM) Credit (RM)
Land A
x3 Revaluation Reserves (Land A) 300,000
Land A 300,000
x6 Land A 400,000
Revaluation Reserves (Land A) 400,000
x9 Land A 100,000
Revaluation Reserves (Land A) 100,000
Land B
x3 Land B 300,000
Revaluation Reserves (Land B) 300,000
x6 Revaluation Reserves (Land B) 100,000
Land B 100,000
x9 Land B 200,000
Revaluation Reserves (Land B) 200,000
Land C
x3 Revaluation Reserves (Land C) 100,000
 Land C 100,000
x6 Revaluation Reserves (Land C) 300,000
Land C 300,000
x9 Bank 1,400
Land C 1,200
Statement of Profit or Loss and Other
Comprehensive Income
(Gain on disposal) 200

7) We din discuss this in class