Accounting standard IAS16: Property, Plant and Equipment make a number of recognition, measurement and disclosure requirements with regard to tangible non-current assets. The term "non-current asset" is defined in accounting standard IAS1: Presentation of Financial Statements. The information given below relates to two companies, both of which prepare accounts by 31 December. Tom Limited: Joy Plc bought a factory machine on 30 June 2020 and paid a total of £420,000. The supplier's invoice showed that this sum was made up of the following items: £ Manufacturer's list price 380,000 Less: Trade discount 38,000 342,000 Delivery charge 6,800 Installation costs 29,600 Maintenance charge for a year to 30 June 2021 27,000 Small spare parts 14,600 £420,000 Jerry Limited: On 1 January 2010, Jerry Ltd bought freehold property for £800,000. This figure was made up of land £300,000 and buildings £500,000. The land was non-depreciable but it was decided to depreciate the buildings on a straight-line basis, assuming a useful life of 40 years and a residual value of £nil. On 1 January 2020, the land was revalued at £400,000 and the buildings were revalued at £450,000. The company decided to incorporate these valuations into its accounts. The previous estimates of the buildings' useful life and residual value remain unchanged. Required: Write journal entries for the revaluation of Jerry Limited's freehold property on 1 January 2020. Also, calculate the amount of depreciation which should be charged in relation to the buildings for the year to 31 December 2020.
Accounting standard IAS16: Property, Plant and Equipment make a number of recognition, measurement and disclosure requirements with regard to tangible non-current assets.
The term "non-current asset" is defined in accounting standard IAS1: Presentation of Financial Statements. The information given below relates to two companies, both of which prepare accounts by 31 December.
Tom Limited:
Joy Plc bought a factory machine on 30 June 2020 and paid a total of £420,000. The supplier's invoice showed that this sum was made up of the following items:
|
|
£ |
|
Manufacturer's list price |
380,000 |
|
Less: Trade discount |
38,000 |
|
|
342,000 |
|
Delivery charge |
6,800 |
|
Installation costs |
29,600 |
|
Maintenance charge for a year to 30 June 2021 |
27,000 |
|
Small spare parts |
14,600 |
|
|
£420,000 |
Jerry Limited:
On 1 January 2010, Jerry Ltd bought freehold property for £800,000. This figure was made up of land £300,000 and buildings £500,000. The land was non-
£400,000 and the buildings were revalued at £450,000. The company decided to incorporate these valuations into its accounts. The previous estimates of the buildings' useful life and residual value remain unchanged.
Required:
Write
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