Accounting Practical Questions

681 Words Sep 18th, 2012 3 Pages
Part A
On 1 July 2011, Kookaburra Ltd acquired an item of plant at a cost of $200 000. The plant has an expected useful life of eight years, and Kookaburra Ltd adopts the straight-line method of deprecation. The tax depreciation rate for this type of plant is 25%. The company tax rate is
30%. Kookaburra Ltd measures plant at fair value. At 30 June 2012, Kookaburra Ltd determines the fair value of the plant to be $186 000. Due to recent developments in plant technology, the remaining useful life of the plant is revised down to three years. At 30 June 2013, the fair value of the plant is determined to be $112 000, with a remaining useful life of two years.
Required
1. For the year ending 30 June 2012:
a) Prepare the
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5 + 10 + (5 + 5) = 25 marks
2. For the year ending 30 June 2013:
a) Prepare the necessary journal entries to account for the revaluation of plant.
Journal Entry 1-Recording Depreciation for the year

Depreciation expense – Plant* Dr 62 000 Accumulated Depreciation Cr 62 000 (Depreciation expense for the year ending 30 June 2013)

*(Depreciation per annum: 186 000/3= $62 000)

b) Determine the carrying amount and tax base of the plant at year end. Prepare the necessary journal entries to account for any deferred tax effect relating to the plant.

Journal Entry 2-Recording Gain/Loss on revaluation for the year

*Loss – Revaluation Decrement (P/L) Dr 12 000 Machine B Cr 12 000 (Loss on revaluation of machine from $186 000 to $112 000)

*Plant Revaluation Previous Revaluation 186 000 Accumulated Depreciation 62 000 Carrying Amount 124 000 Fair Value 112 000 Decrement 12 000

c) In relation to the plant, explain the adjustment required to the deferred tax account.
10 + 10 + 5 = 25 marks

Read Question 11.11 Perth Ltd on page 561-562 of Leo (2012). Required
a) Prepare the necessary journal entries to account for any impairment loss for Division One.
20 marks
Step