FAR210 The information related to the property, plant and equipment of the company is as follows: Financial Accounting And Reporting Assignment, UiTM, Malaysia

School

Universiti Teknologi MARA (UiTM)

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Assignment Type

Individual Assignment

Subject

FAR210 financial accounting and reporting Assignment

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Date

17/01/2024

As at 31 December 2022, the following information has not been included in the company’s financial statements:

1. The information related to the property, plant and equipment of the company is as follows:
a. The depreciation policy of the company is as follows:
i. Building is depreciated on the straight-line method over 50 years with no
residual value every year.
ii. Plant and equipment are depreciated on a reducing balance method on 10% per annum every year.
iii. Motor vehicles are depreciated on a straight-line method on a 20% per annum monthly basis.
iv. Land is not depreciated.
Note: Depreciation on motor vehicles is treated as selling and distribution
expenses while depreciation for other property, plant, and equipment to be treated as administrative expenses.

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b. On 20 December 2022, a lorry was purchased on credit. The following costs were incurred for acquisition of the lorry:

FAR210 financial accounting and reporting Assignment
No record was made in the company’s book in relation to this acquisition.

c. On 1 October 2022, one piece of equipment was disposed of at a loss of
RM25,000. At the date of disposal, the equipment had a cost of RM350,000 and a carrying amount of RM100,000. However, only the equipment’s selling proceeds were recorded and classified as other income.

d. On 1 January 2022, the building was revalued for the first time to the fair value of RM1,750,000. As at 31 December, no record was made in the company’s book. On that date, the remaining useful life of the building was 20 years.

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Required:
i. Explain the components of initial cost of self-constructed property, plant and
equipment in accordance with MFRS 116 property, plant and equipment.
ii. Compute the initial cost for the asset acquired by the company during the year.
iii. Calculate the current year’s depreciation charges for the property,plant and
equipment of the company.
iv. Recommend the company on the accounting treatment on derecognition of the equipment.
v. Advise the accounting treatment and the journal entries for the revaluation of building on 1 January 2022.

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