
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:A company was granted R12 000 to assist in the financing of mining
expenses. The grant was conditional
upon the company mining for at least 2 years. The company ceased
mining on 30 August 2021. Terms of the
grant required the grant to be paid in full. Mining expenses to date 2020
R45 000
2021 R70 000. Prepare the journal entries for 2020 and 2021? Journal
narration as required.
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- 8arrow_forwardDavid Ltd commences operations on 1 July 2020 On the same date, it purchases a machine at a cost of $1000 000 The machine is expected to have a useful life of 4 years, with benefits being uniform throughout its life. It will have no residual value at the end of 4 years Hence, for accounting purposes the depreciation expense would be $250 000 per year For taxation purposes, the ATO allows the company to depreciate the asset over three years—that is, $200 000 per year The profit before tax of the company for each of the next four years (years ending 30 June) is $600 000, $700 000, $800 000 and $900 000 respectively The tax rate is 30 per cent. Required: 1. Calculate the taxable profit on 30 June 2021, 30 June 2022, 30 June 2023.2. Record the necessary journal entries.arrow_forwardInterest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 May 1 $420,000 381,000 October 1 552,000 2020: March 1 June 30 Amounts borrowed and outstanding: 1,428,000 624,000 $1.6 million borrowed at 12%, specifically for the project $4 million borrowed on July 1, 2018, at 14% $18 million borrowed on January 1, 2017, at 8% Required: Note: Round all final numeric answers to two decimal places. 1. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ 933,000 X Capitalized interest, 2020 $ 2,052,000 X 2. If it is assumed that the production complex has an animated life of years and a residual value of $0, compute the straight-line depreciation in 2020. Alpha-numeric input field 115,825 X $ 3. Since GAAP requires accrual accounting, if a company capitalizes…arrow_forward
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