Intermediate Level Question of Financial Accounting
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QUESTION #1
Innovative operates in the site area in Karachi and is importing
a huge plant for its factory from the USA. The plant has a list price of $1.7
million. The current currency exchange rate is 1$ to Rs.155. The custom
clearance at USA ports is $3500. The machinery will be transported through the sea
site band it will take at least 3 months to reach the port at Karachi. The shipment
charges paid will be 10,000euro. Euro to PKR exchange rate is Rs.137.
meanwhile, a team of engineers is hired from France to assemble and install at
a value of Rs. 1 million. Later on, the same team will provide training to
staff for operating the assets at it is estimated that it will be worth Rs.250,000.
A Pakistan company is asked to provide maintenance, they have coated Rs. 1.6
million for four years. Rayan fright forwards his innovative clearing agent at the post the will charge Rs. 260,000 for provision of services excluding the
customs cost paid to Pakistan custom authority which is Rs. 380,000.
It is estimated
that assets will reach on factory premises on May 13, 2019. While after
assembly, it will be completed on August 1st, 2019. Innovative
accounting year start from April 1st to March 31st. Assets'
useful life is assumed to be 20 years with a salvage value of Rs.1.4 million.
Calculate
the cost of Tangible noncurrent asset under the guidelines of IAS16 and
Calculate depreciation for 1st 7 years. Prepare the extracts for SFP
and Profit and loss as well.
After 7 years from installation, the estimate
regarding the useful life of assets has changed and it is being considered. The
asset still has a remaining life of 26 years. The estimation for residual value
has been revised as well. The new residual value is Rs 1.8 million.
Calculate
the depreciation for the upcoming 3 years and what will be book value at the start of the year
11.
After 12 years of service of an asset, it was determined
that onwards reducing balance method will be used till the end the depreciation a charge will be calculated on 10% annually.
Calculate the depreciation for a further 2 years and what will be the book
value at the end of 14 years
