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    IAS 16 Solution

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    Tarusenga
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    IAS 16 Solution

    Uploaded by

    Tarusenga
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    solution

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    IAS 16 solution

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    solution

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    5 views3 pages

    IAS 16 Solution

    Uploaded by

    Tarusenga
    solution

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Q2

    General Journal Waste Limited


    Journal Entries for the year ended 31 December 2020
    Details Debit Credit
    Plant (SFP) 1241 843
    Provision for dismantling and removal costs 1241 843
    Recognition of dismantling costs

    Finance Costs (P/L) (1241 843 *10%) 124 184


    Provision for dismantling and removal costs 124 184
    Recognition of finance costs for year 1

    Finance Costs (P/L)( 1241 843 + 124 184 *10%) 136 603
    Provision for dismantling and removal costs 136 603
    Recognition of finance costs for year 2

    Finance Costs (P/L) (1241 843 + 124 184 +136 603 *10%) 150 263
    Provision for dismantling and removal costs 150 263
    Recognition of finance costs for year 3

    Finance Costs (P/L)(1241 165 289


    843+124184+136603+150263*10%)
    Provision for dismantling and removal costs 165 289
    Recognition of finance costs for year 4

    Finance Costs (P/L) 181 818


    (1241843+136603+150263+165289*10%)
    Provision for dismantling and removal costs 181 818
    Recognition of finance costs for year 5

    Provision for dismantling and removal cost 2 000 000


    Bank 2 000 000
    Payment for dismantling plant
    Q3
    Before accident
    Depreciation: Exterior structure 120 000 000/20 =$ 6 000 000
    Interior cabin fitting 25 000 000/5 = $5 000 000
    Engines 18 000 000* (10 800 +1200)/36000) = $6 000 000

    After Accident (1 October 2018 to 31 March 2019)


    Deprecation: Engines costs = 10 800 000+ (9 000 000+3 000 000) = 22 800 000
    Engine hours= 36 000+ 15000 = 51 000hours
    Therefore deprecation = 22 800 000*(1 000/51000) = $447 059

    Repainting: We capitalise the $2 000 000 for the repainting of the exterior structure
    Exterior structure 2 000 000
    Bank 2 000 000
    Being repainting of the exterior structure

    Upgrade: it is expensed to the income statement as it did not add value or change the
    estimated life span of the interior cabin fitting
    Profit / loss 4 500 000
    Repairs and maintenance 4 500 000
    Being upgrade made on interior cabin fittings

    Changes to the carrying amounts

    Cost` Acc Depreciation Carrying Amount


    Exterior Structure 122 000 000 6 100 000 115 900 00
    (120 000+2 000)

    Interior Cabin 25 000 000 5 000 000 20 000 000


    Fittings(25 000+0)

    Engines(10 22 800 000 447 059 22 352 941


    800+12000)

    Changes to the Income Statement


    Details Debit Credit
    P/L (Exterior Structure) 6 000 000
    Depreciation 6 000 000

    P/L (Exterior Structure) 6 100 000


    Depreciation 6 100 00
    Decreases p/l by 100 000

    P/L (Interior Cabin) 5 000 000


    Depreciation 5 000 000

    P/L (Interior Cabin) 5 000 000


    Depreciation 5 000 000
    No change in the p/l

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